ABN: 52 009 215 347 · of gold produced from the Thunderbox Operations and in June 2018, with the...

SARACEN.COM.AUABN: 52 009 215 347

ABN: 52 009 215 347

ANNUAL REPORT

2018

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CORPORATE DIRECTORY

Board of Directors

Mr Geoffrey Clifford (Non-Executive Chairman)

Mr Raleigh Finlayson (Managing Director)

Mr Martin Reed (Non-Executive Director)

Dr Roric Smith (Non-Executive Director)

Ms Samantha Tough (Non-Executive Director)

Company Secretary

Mr Jeremy Ryan

Registered Office and Business Address

Level 11, 40 The Esplanade Perth WA 6000

Telephone: +61 8 6229 9100 Facsimile: +61 8 6229 9199

Website: saracen.com.au

Stock Exchange Listing

Listed on the Australian Securities Exchange

(ASX Code: SAR)

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street, Subiaco WA 6008


Solicitors

DLA Piper, Level 31, Central Park 152 – 158 St Georges Terrace, Perth WA 6000

Telephone: +61 8 6467 6000

Bankers

Australia and New Zealand Banking Group 833 Collins Street, Melbourne VIC 3008

Telephone: +61 3 9273 5555

Share Registry

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace, Perth WA 6000

Telephone: 1300 850 505 Facsimile: +61 3 9473 2500

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Managing Director’s Report 2

Review of Operations 4

Mineral Resources and Ore Reserves Statement 28

Corporate Governance Statement 31

Directors’ Report 41

Auditor’s Independence Declaration 75

Financial Statements

- ConsolidatedStatementofProfitorLossandOtherComprehensiveIncome 76

- Consolidated Statement of Financial Position 77

- ConsolidatedStatementofChangesInEquity 78

- ConsolidatedStatementofCashFlows 79

- NotestotheFinancialStatements 80

Directors’Declaration 119

IndependentAuditor’sReport 120

ShareholderInformation 126

CONTENTS

Cover image: Loaded truck leaving Karari 1

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DearFellowShareholders,

ItiswithgreatsatisfactionthatIpresentthe2018SaracenAnnualReport.

Highlightsincludemorecashflow,moregrowth,andmoreminelifewitharobustsevenyearcoursenowplottedforourbusiness.Most importantly our safety record continues to improvewith the LTIFR dropping to 1.0 over the 12months,well below the industry average. In addition, Saracen’s strong environmental track record continuedwith no significantenvironmentalbreachesacrossouroperations.

GoldproductionforFY2018exceededallpreviousrecordswithover316,000ozproducedfromourtwooperations,CarosueDamandThunderbox.Thisoutputalsoexceededmarketguidanceandwasdeliveredata lowAll-In-Sustaining-Cost (“AISC”)of$1,139/oz.Cashandequivalentswereover$118matyearend,despitea$71.8minvestmentingrowthcapitalandexplorationduring the year. Inaddition,a further73,532ozofgoldwascontained inclosingstockpilesat yearend,a29% increaseon lastyear.

Wecontinuetodevelopneworesourceswiththecommencementofthe‘C’zoneopenpitatThunderboxandthehighgradeKailisopenpit,80kmsouthoftheThunderboxOperation.Inaddition,twoportalswerecutatThunderboxtofacilitatetheestablishmentofundergrounddrillingplatformsforresourcedelineation.

Thisyearalsofeaturedthepublicationofour inauguralSustainabilityReport.TheReport isanacknowledgementofourresponsibilitiestoallofourstakeholders,andtheneedtooperateinamannerthatfostersconnectionswithourcommunitiesandtheenvironmentandpromotetheirwell-beingandlongevity.

An integralpartofoursustainabilitycommitment isourengagementwith the local indigenouscommunities in the townsofLeonora and Kalgoorlie. Shooting Stars is an educational programme that uses netball and other tools to increase schoolattendanceratesforyoungAboriginalandTorresStraitIslandergirlslivinginWA’sremotecommunitiesandregionaltowns.Weareembracinganopportunitytomakeadifferencebycommitting$150,000overthreeyearstokick-startthisprograminLeonora.

Followingoutstandingsuccesswiththedrillbit,weareconfidentinthelongevityofourbusiness.InFY2018weunveiledourfirstsevenyearoutlookforgroupgoldproduction.Thisisunderpinnedbytheconsistentandpersistentperformanceofoperations,withproductionguidancemetforthelastfiveconsecutiveyears.WerecentlyincreasedannualgoldproductionguidanceforFY2019to325-345,000oz.

Wearenowfocusedondeliveringournextchapterofgrowth,the“flightto400”.Investmentsincludea$60mexplorationbudgetacrosstheSaracengroupforFY2019.AtourThunderboxOperations$13mwillbeinvestedinthedevelopmentofahangingwalldrilldrive,drillplatformsandassociateddrillingtodelineatethefirststageoftheThunderboxundergroundmine.Afurther$17mwillbeinvestedinthedevelopmentofstage2ofthehighgradeKailisopenpit.TheCarosueDamOperationswill receive investmentsof$23m in theconstructionofapastefillplantadjacent to theKarariandWhirlingDervishundergroundmines,thecommencementofdrillingalongthe“corridorofriches”,theconstructionofa$7msealedaerodrome, theexpansionof theaccommodationvillage, theexecutionofa fouryearundergroundminingcontractwithByrnecut,andtheapproval fora feasibilitystudy into thepotentialexpansionof theCarosueDamprocessingplant.TheexcitingjointventurewithAngloGoldAshantialsocontinuestodeliverpositivenewsflowwithdeeperdrillingprogramsintheButcherWelldistrict.

Iwouldliketopersonallythankallofourdedicatedemployeesandcontractorsfortheircontributionstoourrelentlesspushforsustainablegrowthandvaluecreationoverthelastyear.Withouttheengagementandbackingofallofourstakeholders,theseeffortswouldhavecounted for little.Soasweembarkonournextexcitingchapterofgrowth, it isofparamountimportancethatwehavethecouragetokeepoureyesontheprize,andensurethatwedeliverourstakeholderssafeandprosperousoutcomes.

RALEIGHFINLAYSON

Managing Director

MaNagiNg DirECTOr’SREPORT

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“Witha300,000ozpaproductionprofilenowfirmlyestablished,growingcashflowandminelife,nodebtandastrongexecutiveteam,Saracenhasanexcellentplatformfromwhichtocapitaliseonfurthergrowthopportunitiesastheyarise.”

photo:ExcavatoratThunderbox 3

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SaracenMineralsHoldingsLimitedisanASX-listedgoldcompany(ASX:SAR)producing~320,000ouncesperannumfromitstwooperationsinWesternAustralia:

1. CarosueDamapproximately120kmnorth-eastofKalgoorlie,and

2. Thunderboxapproximately45kmsouthofLeinster.

TheCompany’sHeadOfficeisinPerth,WesternAustralia.

Carosue Dam Operations

SaracenMineralHoldingsLimitedowns100%oftheCarosueDamOperations(“CDO”)throughitswhollyownedsubsidiarySaracenGoldMinesPtyLtd.CDOoperationsincludetheCarosueDamProject(comprisingtheKarariandWhirlingDervishgolddeposits),thePorphyryProject(comprisingthePorphyry,MillionDollar,Enterprise,andWallbrookdeposits),andtheDeepSouthProject(comprisingoftheDeepSouthandSafariBoredeposits).SaracenacquiredtheCDOassetsin2006andcommencedcommercialgoldproductionin2010.Sincethen,Saracenhasproducedover1.2millionouncesofgoldfromopenpitsandundergroundminesatCDO.InApril2017,Saracenbeganthedevelopmentofits15thmineintheareawiththecommencementoftheWhirlingDervishundergroundmine.

Saracen’sCDO tenementholdingsare located inoneof theworld’smostprospectivegoldprovinces, incorporating theLavertonandKeithKilkennyTectonicZones,north-eastofKalgoorlie,WesternAustralia.ThisprovinceishometoseveralworldclassgoldminesanddepositsincludingSunriseDam,GrannySmith,andWallaby.Inexcessof23millionouncesofgoldinresourceshavebeenfoundand/orbroughtintoproductioninthisprovince.Saracenisbuildingalong-termstrategicinfrastructureandresourcepositioninthisarea.

Supporting themines,CDOcomprisesaprocessingplant, twoaccommodation villages (with theability to support 400people),variouswaterandpowerinfrastructurefacilitiesandislocated120kmnorthnorth-eastofKalgoorlie.TheCDOprocessingplantwasoriginallycommissionedinNovember2000andhasanameplatecapacityof2.4Mtpa.

Thunderbox Operations

SaracenMineralHoldingsLimitedowns100%oftheThunderboxOperations(“TBO”)throughitswhollyownedsubsidiarySaracenMetalsPtyLtd.SaracenacquiredtheTBOassetsin2014andcommencedcommercialgoldproductionin2016.TBOoperations include theThunderboxProject (comprising theThunderbox,RainbowandMangillagolddeposits), theKailisOpenPit,theBannockburnProject(comprisingtheBannockburnandNorthWellgolddeposits)andtheWaterlooProject(comprisingtheWaterlooandAmoracnickeldeposits).InOctober2017,SaracenpouredtheonemillionthounceofgoldproducedfromtheThunderboxOperationsandinJune2018,withthecuttingoftheportalandestablishmentofanexplorationdrilldrive,begandevelopmentofthepotentialThunderboxundergroundmine.

TBOis located inthehighlyprospectiveYandalandtheAgnew-WilunaBelts intheNorthEasternGoldfieldsofWesternAustralia,centredontheThunderboxOpenPitandCILgoldtreatmentplantlocated45kmsouthofthetownofLeinsterinWesternAustralia,immediatelyadjacenttothesealedGoldfieldsHighway.

TheThunderboxprocessingfacility,whichwasrecommissionedbySaracenduring2015incorporatesasingle-stagecrusher,aSAGmillandaballmillaswellasconventionalCILleachingandelutioncircuits.NameplatecapacityoftheTBOprocessingplantis2.5Mtpa,although,duringFY2018theprocessingplantdidattimes,operateatarunrateofupto2.8Mtpa.Existinginfrastructurecomprisesa268personaccommodationvillage,anairstrip,powerandwaterinfrastructure,GoldfieldsGasPipelinespur,borefieldwatersupplyandtelecommunicationservices.

DuringFY2018,SaracencompletedminingStage1oftheThunderboxopenpit,knownasAZoneandcommencedminingactivitiesattheThunderboxopenpitCZone.Inaddition,SaracencommencedandcompletedminingattheStage1Kailisopenpit.

REVIEWOFOPEraTiONS

OVErViEW

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Saracentenementholdingsandprincipalgolddeposits.

L A K E

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Gwalia

Granny Smith

Sunrise Dam

Wallaby

Kanowna Belle

Superpit

Gwalia

Granny Smith

Sunrise Dam

Wallaby

Kanowna Belle

Superpit

Jaguar

Lawlers

Darlot Garden Well

Moolart Well

Agnew

LEONORA

LAVERTON

LEINSTER

MENZIES

KALGOORLIE

LEINSTER

KALGOORLIE PERTH

Carosue Dam Plant

C aros ue Dam Operations

Thunderbox

Waterloo


Deep South

PorphyryPorphyry

ThunderboxPlantPlant

Waterloo

Bannockburn

Whirling DervishWhirling Dervish

KarariWhirling DervishCarosue Dam Plant

Carosue Dam Deep South

Operations

Karari

LEGEND

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Kailis

Main Public Road Unsealed Roads Saracen Private Access Roads Carosue Dam Operations Carosue Dam JV Tenements Thunderbox Operations Thunderbox JV Tenements Saracen Projects AngloGold owned Gold Fields owned St Barbara owned Regis owned Northern Star owned KCGM owned Independence Group owned

Otto Bore

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HEalTH, SafETy AND ENVirONMENT

Health & Safety

TheSaracenGroupLostTimeInjuryFrequencyRate(“LTIFR”)forthe12monthstoJune2018was1.0(2017:3.7),a72%improvementandtheTotalRecordableIncidentFrequencyRate(“TRIFR”)was11.7(2017:18.3),a36%improvement.ItisparticularlypleasingtoreportthesesignificantimprovementsinFY2018forbothofthesekeylagindicators–atestamenttoSaracen’scontinuingbusinessimprovementandmaturity.

During the year, the focus has been on ensuring that Saracen has a Safety Management System based on the riskmanagementofprincipalhazards,includingtheregularreviewandauditoftheCompany’scriticalcontrols.Themonitoringandinterpretationofbothleadandlagindicatorsisacoreareaaspartofourdrivetoachieveandensureasafeplaceofwork.

To ensure the ongoing readiness of the Company’s Operational Emergency Response Teams (“ERT”), training andenhancementoftheteams’capabilitiescontinuedthroughouttheyear.ThevalueofthiswasdemonstratedduringMarch2018whentheERTteamwascalledupontoassistinthemanagementofasmallgoldroomfireattheThunderboxoperation.Pleasingly,thisincidentwasskilfullycontainedwithnoinjuriesandminimalimpactongoldproduction.

DuringFY2018,theCompanyhasseenconsiderableimprovementsintheHealthandSafetyareabutalsorecognisethatfurther improvements are still required to strive for an injury freeworkplace. Throughout the year, the Saracen BoardandExecutivehavemade themselvesavailable to complete “verificationof risk” tasks in thefield,whichwasapositiveengagementanddemonstratesCompany-widecommitmenttothiscriticalbusinessarea.

ToensurecontinuingCompanyfocusinthisarea,aSafetyResetinitiativewascompletedduringQ4ofFY2018,settinganewchallengeforthenextlegofoursafetyjourney.Thechallengewasencompassedinthefollowingstatement“Thestandardyouwalkpastisthestandardyouaccept”.Weexpectthatsafetyperformanceacrossouroperationswillcontinuetoimproveasthebusinesscontinuestogrowandmature.

photo: Pit Wall inspections at Thunderbox

“ During a year of unparalleled growth for Saracen, we are proud to say that our safety record continued to improve, and that there were no significant environmental incidents.”

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Environmental Regulation and Performance

Saracen recognises that respecting the environmental values held by people both within and outside of the Company is an integral part of doing business.

Saracen is committed to conducting operations in an environmentally sensitive manner. Through the implementation of a Company-wide Environmental Management System (“EMS”), Saracen is able to continually minimise any adverse environmental risks that may be associated with its business activities. The Saracen Group is subject to environmental regulations associated with the granting of licences by various regulatory bodies, including the Department of Mines Industry Regulation and Safety (“DMIRS”), Department of Water and Environmental Regulation (“DWER”), and the Department of Planning, Lands and Heritage (“DPLH”). The Group continues to operate in compliance with these regulations.

Inspection and monitoring of vegetation, groundwater and emissions are conducted to ensure compliance and provide evidence of compliance in accordance with the above mentioned licences. Results are reported in various annual reports to regulatory bodies in accordance with statutory requirements. There were no significant non-compliances during the year.

The Group is also subject to reporting requirements of the National Environmental Protection (National Pollution Inventory) Measure 1998 (“NPI”) and the National Greenhouse and Energy Reporting Act 2007 (“NGER”). This legislation requires the Group to report its annual greenhouse gas emissions and energy use. Systems and processes have been implemented for the collection and calculation of the data required for both of these reports submitted in September 2017 and October 2017 respectively.

Key environmental achievements during FY2018 included:

• Completion of a rehabilitation performance assessment report for the Serengeti and Safari Waste Rock Landforms (Mt Celia Project). The landforms have successfully achieved compliance with closure completion criteria commitments, therefore Saracen have applied for “sign off” of the infrastructure under the requirements of the Mining Rehabilitation Fund (“MRF”).

• Submission and attainment of all key environmental approvals for 10 years of operations at the Carosue Dam Project. All major infrastructure requirements in the current CDO Life of Mine Plan have been fully approved through the required regulatory bodies.

• Completion of a 10 year Water Supply strategy for CDO. This strategy includes the findings of an airborne Time Delay Electromagnetic survey completed at Carosue Dam and Deep South in December 2017. Importantly, the findings from this survey will enable Saracen to more accurately and efficiently target groundwater resources through future drilling campaigns.

• The Company progressed planning for a semi–integrated landform/Tailings Storage Facility (“TSF”) design of the Thunderbox Eastern Waste Rock Dump and TSF to minimise disturbance.

• The Company finalised the updated Risk Assessment on the inherited legacy contamination caused by windblown dust from TSF Cells A & B at Thunderbox. This assessment demonstrated that the risk to human health and the environment from dust outside the TSF within vegetated areas immediately adjacent to the TSF, is low and can be managed through normal site practices. The Company will continue to monitor dust deposits in line with the approved Site Management Plan to ensure that the risk remains low and continues to be managed.

• Construction and development of a new palaeochannel borefield at Bannockburn to deliver 10 years of sustainable process water supply for the Thunderbox operations.MiningoftheThunderbox‘A’zonepitandKailisstage1weresuccessfullycompletedduringFY2018.Asminingofthe‘A’zonepitwasconcluding,wastestrippingoftheadjacent

photo: Tailings Dam surface at Luvironza 7

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Forthefinancialyearended30June2018(“FY2018”),goldproductionfromtheCDOwas171,301oz(2017:155,970oz)atanAllinSustainingCost(“AISC”)of$1,199/oz(2017:$1,413/oz).

DuringFY2018, theKarariundergroundminerealisedasteadystateproductionrateofgreater than1.0Mtpa.Totaloreproductionfortheyearwas1,134,000tat2.87g/tfor104,000containedounces-a30%increasetotonnagefromthepreviousyear.UndergrounddrillingatKararihascontinuedthroughouttheyearfromtwoadditionaldrillplatformswiththestatedaimofprovidinginfilldrillingandincreasedresourceconfidence.

AnumberoflargecapitalprojectsarecurrentlyinprogressatKarari.Thenewheavyvehicleworkshopconstructionisonscheduleandacontracthasbeenawardedfortheconstructionofapastebackfillplantcapableofproducing110to120m³/hrofpasteforfillingstopesintheKarariundergroundmine(andpotentiallytheWhirlingDervishundergroundminealso).

Asplanned,theFY2017focusatDeepSouthhadbeentorampuporeproductiontoasustainableprofilewhilstcarryingoutthenecessaryworktoincreasetheunderstandingoftheorebody,andcontributepositivelytowardsproductionduringFY2018.ThisprovidedasolidplatformleadingintoFY2018andtheimprovedunderstandinghasenableddevelopmentandproductionactivitiestosuccessfullybede-coupledduringtheyearallowingoreproductiontosustainanaverage48,000oretonnespermonth.OreproductionforFY2018fromDeepSouthtotalled584,[email protected]/tfor58,000containedounces.

Production will taper off at Deep South during FY2019. This is in line with the Company’s strategy of realising bulkundergroundproductionwithindirecttruckingdistanceoftheCDOmill.TheKarari/Dervishminecomplexisexpectedtofillthe2.4MtpaCDOmillfromthecommencementofFY2020.

DevelopmentoftheWhirlingDervishdecline(whichwaspreviouslydevelopedtotheundergrounddrillingplatform),re-commencedduringtheJune2018quarterafterapprovalwasgainedtoestablish theundergroundmine forproductionactivitiesinFY2019

Attheendofthefinancialyearthedeclinehasadvanced51mverticalbelowtheaccessportal(231mbelowthesurface).OremineralisationwasintersectedintheundergroundworkingswhichwillbeestablishedforproductionactivitiesduringFY2019.

Carosue Dam Quarter

Units September 17 December 17 March 18 June 18 fy2018

Underground Mining

OreMined t 423,000 359,000 473,000 463,000 1,718,000

MineGrade g/t 3.2 2.9 2.9 2.8 2.9

ContainedGold oz 43,217 33,008 44,329 42,060 162,614

PrODuCTiON & COSTS

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this photo: Sunset over Carosue Village top bottom: Rock bolting at Deep South 9

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DuringFY2018,goldproductionfromtheThunderboxOperationswas145,152oz(2017:116,837oz)atanAISCof$1,071/oz(2017:$1,253/oz).

OpenpitminingattheThunderboxAZonepitandKailisStage1pitwerecompletedduringtheyear.TotaloreproductionfortheyearfromAZonewas735,000tat2.55g/tfor60,000containedouncesandtheKailisStage1produced871,000tat2.31g/tfor65,000containedouncesofwhich32,000ouncesremainonstockpileattheendofFY2018.TheKailisStage2openpitisscheduledtocommenceproductioninDecember2018.

MiningfromtheThunderboxCZonepitwasongoingwiththisoresupplyreplacingtheAZonepitasthebaseloadfeedfortheThunderboxprocessingplant.TotaloreproductionfortheyearfromCZonewas1,804,000tat1.04g/tfor60,000containedounces.

PerformanceduringtheyearoftheThunderboxorebodywasexcellentwith2.5Mtminedatanaveragegradeof1.5g/tandayearlyminecallreconciliationfactorof101%ofthecontainedounces.

InlateFY2018,undergroundminingalsocommencedatThunderboxwiththecuttingoftwoportalsinthesouthernendoftheAZonepit.ThefocusforFY2019willbeonestablishingthedrillingplatformtoallowtheorebodytobedelineatedatdepth,throughamethodicaldrillingprogram.Amodestamountoforewillbedeliveredduringtheyearaspartofthesedevelopmentactivities.

Thunderbox Quarter

Units September 17 December 17 March 18 June 18 fy2018

Open Pit Mining

TotalMining bcm 4,425,000 3,507,000 2,155,000 1,819,000 11,906,000

OreMined t 575,000 912,000 913,000 1,010,000 3,410,000

MineGrade g/t 2.3 1.5 1.9 1.4 1.7

ContainedGold oz 41,786 44,313 54,557 44,787 185,443

topphoto:‘C’ZonepitatThunderbox10

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“WithWhirlingDervishshowingearlypromise,andKarari’soutstandingformcontinuing,Saracen is well positioned to continue mining at Carosue Dam foratleastthenext10years”

abovephoto:Thunderboxtwinportals 11

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TheCDOprocessingplantcontinuedtoperformatabovenameplatecapacityduringFY2018,with2,479,000tonnesoforemilled.Theplantranatanaverageheadgradeof2.3g/twhichreflectedthecontributionfromhighgradeundergroundoresources,namelyKarariandDeepSouth,supplementedwithlowergradestockpilesandquantitiesofthethirdpartyore.Overallrecoveryfortheyearwas93.0%whichisinlinewiththelongtermaverageforCDO.Totalgoldproducedfortheyearwere171,301oz.

Carosue Dam Quarter

Units September 17 December 2017 March 18 June 18 FY2018

Mill Production OreMilled t 646,000 633,000 589,000 611,000 2,479,000 MillGrade g/t 2.2 2.1 2.5 2.5 2.3 Recovery % 93.0% 93.1% 93.2% 92.6% 93.0% RecoveredGold oz 43,083 40,371 43,167 44,680 171,301

InFY2018,theThunderboxprocessingplantexceedednameplatecapacityforthefirsttimesinceitsre-startwithatotalof2,656,000tonnesmilledatanaveragecostof$20/t.TheinclusionofKailisoxideoreinthemillblendcontributedtotheincrease in throughputratesandprovidedahighergradesupplement for thepredominantly freshoresourced fromtheThunderboxpits(AandCzones).Anaveragefeedheadgradeof1.8g/twasrealised(a5%increaseonFY2017)andtheplantrecoverywas93.9%(a2.5%increaseoverFY2017).Recoveriesprogressivelyincreasedbyanaverageof0.3%eachquarterfollowingthecompletionofseveralimprovementandoptimisationprojectsacrosstheCILandgravitycircuitsandaveraged94.3%duringthesecondhalfoftheyear.Thetotalouncesproducedwere145,152oz.

Thunderbox Quarter

Units September 17 December 17 March 18 June 18 FY2018

Mill Production OreMilled t 554,000 676,000 710,000 716,000 2,656,000 MillGrade g/t 2.2 1.8 1.7 1.6 1.8 Recovery % 93.3% 93.6% 94.6% 94.1% 93.9% RecoveredGold oz 37,191 37,152 36,560 34,249 145,152

PrOCESSiNg

photo - Carosue Dam Mill crew12

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DuringFY2018,Saracencontinuedtofocusonorganicgrowthopportunitiesproximaltoexistingresourcesandoperatingmines.Asignificant investment inundergrounddrillingwasakeypriorityaimedatdelivering furthergrowth in theOreReservesandsubsequentminelife.Atotalof118,413mofundergrounddiamondcorewasdrilledatCarosueDam.ThisdrillingwasspreadacrosstheKarari,WhirlingDervishandDeepSouthoperations.

Underground drilling atWhirlingDervish commenced in the first half of FY2018. The large underground diamond drillprogramconsistingof43,223mwasinitiallyfocusedontheclosespacedinfilldrillingacrosstheupperlevelsproximaltotheportallocation.Inthesecondhalfoftheyearanumberofdeeperresourceextensionandexplorationholesweredrilled.Thedrillinghasprovidingvaluablelocalscaledataandhasalsodemonstratedthatthemineralisedsystemremainsopen.

DrillingatKarariwasacceleratedinthesecondhalfofFY2018,followingthecompletionofanewdiamonddrillplatformatthe1940Level.Thisdrillplatformprovidesthenextvantagepointinthenorthsideoftheminethatwillcontinuetofacilitategrowthandextensionoftheresourcefromthislocation.DrillingthesouthernextensionswillcommenceearlyinFY2019,asthe1916Leveldrillplatformiscompleted.

SurfacedrillingwasfocusedacrosstheThunderboxregion,withresourcedefinitionprogramsundertakenatThunderbox‘D’Zone,KailisandOttoBore.Theseprogramswerelargelyresourceinfillinnature,confirmingthegeologicalinterpretationandvalidatinginheritedhistoricaldatasets.TheseprogramswerehighlysuccessfulandwillwarrantadditionalfollowupdrillingduringFY2019.

Regionally,anumberofhigh-resolutiongravitysurveyswereconductedacrosskeyprospectiveareas.TheseincludedtheBannockburndistrictandtheCarosueDamminecorridor.Theresultsfromthesesurveyshavesignificantlyimprovedthelocalscaletargetingthroughincreasedresolutionoftheinterpretedgeology.DrillingofthesekeytargetshascommencedandwillcontinuethroughintoFY2019.

TheButcherWell JV project with AngloGold Ashanti Australia (ASX:AGG) has also been advanced during FY2018, withAngloGoldcompletinganumberofprogramsacrosstheButcherWellandLakeCareyprojects.HighlightsincludedanewdiscoveryatOldCamp,whichwillcontinuetobeafocusofongoingworkforFY2019.

EXPlOraTiON

photo: Inspecting new drill core at Luvironza

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EarlyinFY2018drillingcontinuedfromtheupperdrillplatformstofurtherenhancetheconfidenceinthemineplan.Asmallhiatus indrillingwhiletheprogramsatWhirlingDervishcommenced,facilitatedareviewoftheplanned surface ‘Deeps’ program. This programwasaimedtotestupto900mbelowsurface.TheadditionofathirdjumbointoKarariacceleratedthedevelopmentofthe1940Leveldiamonddrillplatform,whichcreatedthe opportunity to complete the ‘Deep’ holes fromunderground.TheseholeswillbecompletedinamorecosteffectivemannerinFY2019.Drillingfromthe1940LeveldrillplatformbelowtheFY2017OreReservehascontinuedtodeliverexceptionalwidthsandgrades.

Highlights include:

KREX024: 40.2m @ 4.2g/t from 342.2m

KREX026: 13.8m @ 9.1g/t from 309.0m

KRRD228: 44.7m @ 4.4g/t from 283.0m

KRRD246: 19.1m @ 6.2g/t from 361.0m

Karari ProjectedLong Section

0 250m

2000mRL 2000mRL

75

00

mN

75

00

mN

80

00

mN

S N

80

00

mN

LEGEND

1m @ 0.9g/t

16.2m @ 16.2g/t

19.0m @ 6.3g/t

14.7m @ 10.2g/t

12.0m @ 6.8g/t

8m @ 5.3g/t

11.1m @ 9.8g/t

6.1m @ 14.3g/t

17.8m @ 4.1g/t

11.9m @ 5.5g/t

5.0m @ 15.2g/t

1940 Drill Drive

2070 Drill Drive

2140 Drill Drive

Planned

Planned Drilling FY19-20

photo:DrillingundergroundatKarari14

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LEGEND

2000mRL

2200mRL

2000mRL

2200mRL

49

60

0m

N

49

60

0m

N

50

00

0m

N

50

00

0m

N

Dervish ProjectedLong Section

0 200m


2.0m @ 2.8g/t

4.8m @ 1.3g/t

9.0m @ 24.1g/t

0.8m @ 9.7g/t

4.3m @ 5.1g/t

12.1m @ 5.3g/t

5.9m @ 9.6g/t

18.9m @ 4.2g/t

6.4m @ 8.1g/t

5.3m @ 1.2g/t

9.4m @ 4.1g/t

15.8m @ 5.2g/t

27.0m @ 2.6g/t

7.3m @ 4.8g/t

18.0m @ 3.0g/t

6.3m @ 3.6g/t

30.2m @ 3.5g/t

1.7m @ 3.9g/t

5.1m @ 4.5g/t

26.0m @ 2.5g/t

2.0m @ 3.6g/t

15.0m @ 4.5g/t

2.8m @ 5.0g/t

2.9m @ 2.2g/t

4.5m @ 3.4g/t

20.7m @ 2.0g/t

34.3m @ 5.7g/t

15.0m @ 1.2g/t

Osm

an

Fau

ltOpen Pit Production

7.38Mt @ 1.49g/t for 352,800 oz

FOOTWALL LODEHANGINGWALL LODES

49

59

0m

N

Highlights include:

WDEX033: 32.3m @ 3.0g/t from 261.0m

WDGC095: 6.1m @ 34.3g/t from 224.0m

WDRD044: 34.0m @ 4.1g/t from 273.0m

WDRD045: 34.0m @ 4.0g/t from 330.5m

Whirling Dervish

A significant underground drilling program was carriedout at Whirling Dervish during FY2018. An undergroundplatformwasestablishedearly in quarter 1,withdrillingcommencingassoonaspractical.DrillinginitiallyfocusedonclosespacedgradecontrolstyleinfillintheupperareasoftheOreReservetoconfirmgradevariabilityandincreasegeological confidence. Exceptional drilling productivitieswereobservedearly in theprogram,whichexpedited theextensionalexplorationdrillingplannedforthesecondhalfoftheyear.Theexplorationprogramtestedthecontinuityofthedowndippositionandreturnedsomeveryencouragingresultsinthesouthernendofthelodes.Lateinthesecondhalf of the year, as the programs focused on the north,furtherpositiveresultswerereturned.TheseareaswillbefollowedupwithfurtherdrillinginFY2019.

photo:UndergrounddiamonddrillingprogramatWhirlingDervish 15

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Saracen Mineral Holdings DEEP SOUTH Resource DevelopmentLong Section Projection

0 100m

31000m

N

31200m

N

31400m

N

31000m

N

31200m

N

31400m

N

200mRL

100mRL

0mRL

-100mRL

-200mRL

S N

2017 Ore Reserve Outline

LEGEND

NSI

6.0m @ 3.5g/t

5.2m @ 6.7g/tDSGC355

DSGC3502.0m @ 4.3g/t

1.4m @ 21.2g/tDSGC351

DSGC3492.2m @ 22g/t

DSGC3602.1m @ 8.9g/t

DSGC3522.2m @ 5.6g/t

DSGC3593.3m @ 6.9g/t

DSGC370

4.8m @ 10.8g/t

DSGC3572.9m @ 9.8g/t

NSINSI

DSRD0612.3m @ 8.5g/t

DSRD0636.2m @ 6.0g/t

NSIDSRD062

DSRD0643.2m @ 5.5g/t

DSRD0657.2m @ 3.6g/tinc. 1.3m @ 12.9g/t

DSGC3422.9m @ 7.1g/tinc. 0.7m @ 23.3g/t

DSGC3431.8m @ 11.4g/t

DSGC3443.1m @ 3.7g/t

DSGC3452.4m @ 6.1g/t

NSI

DSGC361a2.9m @ 9.5g/t

DSGC3623.3m @ 3g/t

NSINSI

DSGC3682.5m @ 8.3g/t

DSGC3680.4m @ 35g/t DSGC3685.8m @ 6.8g/t

DSGC3716.6m @ 2.9g/t

NSI NSI DSGC3742.7m @ 8.4g/t

DSRD0610.7m @ 11.1g/t

Deep South

Drilling at Deep South during FY2018 was focused onextensional and infill grade control drilling below the OreReserve.Anundergrounddiamond rig operated formost ofthe year, anddrilled21,819m, targetingboth theButlerandScarlettLodes.Thegradecontroldrillingcorrelatedwellwiththe previous resource drilling, with the existing high gradetrendsconfirmedanddefined.Theextensionaldrillprogramhighlightedfurthergradevariabilitywithdepthandanoverallreductionininmineralisationwidths.Adetailedreviewofthemineralisationcontrolshasidentifiedanumberofnewtargetsbelowthecurrentminedesign.ThesetargetswillbetestedinthefirsthalfofFY2019.

Highlights include:

DSGC265: 8.0m @ 7.9g/t from 282.0m

DSGC274: 9.1m @ 6.3g/t from 116.1m

DSGC332: 8.8m @ 8.5g/t from 102.5m

DSGC340: 2.8m @ 9.9g/t from 218.2m

photo:OredelineationatDeepSouth16

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KailisCross Section

175140 mE0 50m

LEGEND

Mineralisation

Drill Holes

New Result

300mRL 300mRL

33

80

0m

N

33

70

0m

N

33

70

0m

N

33

80

0m

N

N S

Pit Design

33

90

0m

N

5m @ 0.4g/t

9m @ 15.7g/t

6m @ 1.8g/t

2m @ 0.5g/t

SurfaceKLG

C_373_943

KLG

C_373_942

KLG

C_373_944

6m @ 2.1g/t

KLG

C_373_945

KLG

C_373_946

KLG

C_373_947

KLG

C_373_948

KLG

C_373_596

KA

C019

KLG

C_373_597

KA

DD

0006

PG

249

3m @ 14.1g/t

KLG

C_373_598

KLR

D_2373_018

incl 3m @ 45.6g/t

KA

RD

0221

KLG

C_373_599

KA

RC

0032

KLG

C_373_600

KLR

D_2373_059

KA

RC

0031

1m @ 9.0g/t

Highlights include:

KLGC_340_258: 22.0m @ 8.8g/t from 32.0m

KLGC_330_031: 12.0m @ 7.2g/t from 20.0m

KLGC_330_036: 8.0m @ 5.6g/t from 29.0m

KLGC_330_069: 12.0m @ 19.1g/t from 32.0m

Kailis

Prior to andduring theminingof theKailis openpit, anumberofextensive infilldrillingprogramswereexecutedtode-risktheproject. The Kailis mineralisation is controlled by a network offlat dipping shear zones within a large granite host. The gradedistributionishighlyvariableduetothehighproportionofvisiblegold and the influence of theweathering profile. Closed spaceddrilling was critical to improve the resource performance andincrease therecoveryofouncesduringmining.A totalof75,408metersofRCdrillingwascompletedatKailisduringtheyear.

photo:SurveyorsettingoutoreblocksatKailisPit 17

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Otto BoreLongsection305000 mE

0 200m

400mRL

500mRL

400mRL

500mRL

68

89

00

0m

N

N S

68

89

50

0m

N

68

89

00

0m

N

300mRL

200mRL

LEGEND

68

88

85

5m

N

13m @ 9.0g/t

7m @ 12.1g/t

20m @ 8.5g/t

15m @ 3.9g/t

13m @ 6.6g/t8m @ 8.8g/t

14m @ 4.1g/t

11m @ 4.3g/t12m @ 6.2g/t

3m @ 15.7g/t

17m @ 9.6g/t

11m @ 4.3g/t

15m @ 3.9g/t


Otto Bore

The Otto Bore project (formally known as Mangilla) is aMineralResourcelocated9kmnorthoftheThunderboxmill.UptoFY2018,SaracenhadnotcompletedanydrillingattheOtto Bore project. With increased throughputs observed attheThunderboxmillwiththeintroductionofsofteroxideore,theprojecthasbeenreinvigoratedgiven itshighpercentageof oxide material. The mineralisation strikes north-southanddips~60°tothewest.Anumberofhighergradeshootsplunge gently to the south andmimic a classic ‘pinch andswell’ geometry. During FY2018 the first resource definitionprogramaimedtovalidatetheexistingdataaswellasinfillthehighergradeareasoftheresource.FurtherfollowupdrillingisplannedforFY2019.

Highlights include:

OBRD040: 20.0m @ 8.5g/t from 33.0m

OBRD112: 17.0m @ 9.6g/t from 55.0m

OBRD012: 13.0m @ 9.0g/t from 25.0m

OBRD052: 13.0m @ 6.6g/t from 12.0m

photo:Geologistinspectinggradecontrolcuttings18

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THUNDERBOXLong Section

304180mE

0 250 500m

GA

P F

AU

LT

UG Ore Reserve

19m @ 2.2g/t

74m @ 1.6g/t

20m @ 1.8g/t

15m @ 3.7g/t

12m @ 5.4g/t

30m @ 2.0g/t

9m @ 1.3g/t



S N

A ZONE C ZONE

D ZONE

Pit Design

as at Jun18

Actual UG Development

6879000m

N

6880000m

N

6879500m

N

6879000m

N

6880000m

N

6879500m

N

2500mRL

2000mRL

2500mRL

2000mRL

6880500m

N6880500m

N

LEGEND

Highlights include:

TBRD101: 38.0m @ 3.6g/t from 99.0m

TBRD103: 27.0m @ 5.9g/t from 70.0m

TBRD106: 11.0m @ 4.7g/t from 155.0m

TBRD102: 24.0m @ 1.8g/t from 69.0m

Thunderbox

Following an extensive drilling campaign in the ‘A’ Zone atThunderboxinFY2017whichresultedinamaidenundergroundOre Reserve, attention returned to potential open pitopportunities.AreviewoftheThunderbox‘D’Zonehighlighteda number of small gaps in the drill coverage which wouldrequire infilldrilling to increase theconfidence in thegradecontinuityandthegeologicalinterpretation.Asmallresourcedefinitionprogramwascarriedout inthesecondhalfof theyeartotestthesedatagapsandworktowardsbuildingthe‘D’ZoneintotheThunderboxOreReserve.Thedrillprogramwassuccessfulindefiningthemineralisationandreturnedsomepositiveresults.

photo:Loggingdrillcore 19

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Highlights include:

BWD031: 49.0m @ 5.2g/t from 589.0m

BWD052: 29.0m @ 12.9g/t from 562.0m

BWD037: 5.0m @ 31.0g/t from 416.0m

BWD041: 5.0m @ 10.6g/t from 343.0m

Butcher Well Farm-In Joint Venture

The Butcher Well farm-in Joint Venture is an agreementbetween AngloGold Ashanti Australia Ltd (“AAGA”) andSaracen.AAGAisfarmingintotheprojectbyspendingupto$25Mtoearn70%.DuringtheFY2018periodAAGAhasbeenactively exploring both the Butcher Well corridor and keytargetsacrosstheLakeCareytenements.DrillingattheOldCampprospecthassuccessfullydelineatedanewlodewhichhas significant underground potential. Early metallurgicaltest work completed confirms historical analysis withvariablerecoveriesbeingreported.Drillingandtestworkisongoingandwillformpartoffutureminingstudies.

photo:CuttingdrillcoreatCarosueDam20

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Carosue DamCorridor

ProjectedLong Section

0 2km

KarariWhirlingDervish

Luvironza Montys - Elliot’s

Depth of Drilling

12 km

???? ? ?

S N

?

PlantAtbara

Om

durman

Whirling D

ervish North

9m @ 2.0g/t

15m @ 2.3g/t

8m @ 5.3g/t

“Wearerampingupourexplorationefforts,drillingoutahostoftargetsrangingfromimmediateextensionstoknowndeposits,tominecorridoranomaliestargetingnewdiscoveries.”

Regional Exploration

Adetailedgeologicalmappinganddrillholeloggingstudywascompleted at theKarari deposit early in FY2018 to advancetheunderstandingof thecontrolsandmechanisms forgoldmineralisation. The outcomes from this work highlighteda number of characteristicswhich are applicable to furtherdiscovery along the Carosue Dam corridor. To improve thetargetingalong thecorridorahigh-resolutiongravitysurveywascompleted.Thistargetingworkwillbefollowedupwithdrilling in FY2019. The Bannockburn region was also thesubjectofintensereviewduringFY2018.Thereviewincludeddetailed mapping of existing pits, geological modelling ofhistoric drill data and acquisition of regional scale high-resolutiongravityandmagnetotelluricdata.This reviewhasupgraded the prospectivity in the Bannockburn district andwillbethesubjectoffurtherworkinFY2019.

photo:Explorationrampingupalongthe‘corridorofriches’ 21

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TheGroupreportedanetprofitaftertaxof$75.6million,anincreaseof166%onthepreviousyear(2017:$28.4million).Thisresultisinclusiveofanon-cashwritedownof$0.9millionrelatingtothedisposaloftheWallbrookproject,theexpensingof$1.4millionofexplorationcostspreviouslycapitalised(refertonote11),andagainof$10.6monthedisposaloftheKingoftheHillsproject.

Sales revenue for the year was $511.0million, up 21% from $423.1million inthepreviousyear.Goldproductionfortheyearwas316,453ouncesup16%from272,807ouncesinFY2017.Goldsalesfortheyearwere317,675ounces,up19%from266,556ouncesin2017andtheaveragegoldpricerealisedfortheyearwas$1,606/oz,down2%from$1,642/ozin2017.

Grossprofitfromminingoperationsfortheyearwas$117.6million(2017:$51.6million)afterdeducting$17.8millionforroyaltiesand$94.3millionindepreciationandamortisation(2017:$14.6millionand$74.7millionrespectively).

Netcashflowfromoperationsfortheyearwas$191.4million(2017:$125.6million).Capitalexpenditureonpurchasesofplantandequipment,minedevelopmentandexplorationtotalled$130.2millionfortheyear.ThiswasprimarilyrelatingtothedevelopmentoftheThunderboxCZoneandKailisopenpitsatTBOandtheKarari,DeepSouthandWhirlingDervishundergroundminesatCDO(2017:$117.9million).

FINANCIAL rESulT

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“Wehavekeptourcoststightandremaineddebtfree,thisinturnhasenabledustogrowourcashandequivalentsbyanotherA$17millioninthelastquarteralonetoA$118million.”

Asat30June2018,Saracen’stotalcashandliquidpositionwas$106.7million(30June2017:$43.9million),comprisedof $99.8millionheld in cash and 4,300 ounces of gold intransit(approx.$6.9million).Goldintransitwasvaluedusingapriceof$1,600/oz.Inaddition,SaracenholdsinvestmentsinRed5Limited(ASX:RED),NexusMineralsLimited(ASX:NXM)andMatsaResourcesLimited(ASX:MAT)whichwerevaluedat$11.7millionasat30June2018.

The Company maintains a long term senior corporatefinancingfacility.Thefacilityincludesaninitial$45millionloan facility, $5millionbankguarantee facility andagoldhedgingfacility.Thefacility isforatermofthreeyears(toNovember2019)andfeaturesan“evergreen”arrangementwith an annual review date whereby the term can beextended.

The Facility also features an accordion provision underwhichSaracencanrequestuptoanadditional$105millioncapacityunderthecorporateloan(totakethetotalloanto$150million)withtheapprovalofthesyndicatemembers.

Asat30June2018,thefacilityhadnotbeendrawndownon.

At30June2018,theGrouphadinplaceatotalgoldhedgingprogramcomprisingof275,600oz(2017:235,343oz)forwardsales contracts at an average price of $1,730/oz (2017:$1,573/oz)comparedtothe30June2018goldspotpriceof$1,691/oz.TheseouncesarescheduledtobedeliveredovertheperiodfromJuly2018toMarch2021.

CASH,DEBT& HEDgiNg

photo: Weighing and recording part of this year’s record gold production 23

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In FY2019, gold production will be principally sourced from the Karari, DeepSouthandWhirlingDervishundergroundmineswiththebalancecomingfromthirdpartyorepurchaseagreementsandvariousorestockpiles.

ProductionguidanceatCDOforFY2019is190,000to200,000ozs.

Saracen’sbusinessplanforCDOoverthenext2yearscomprises:

• Deliveryalignedtomeetorexceedthe7yearproductionoutlook,

• IncreaseproductionfromKarariundergroundmineto1.5Mtpa,

• CommenceusingcementedpastefillatKararitowardstheendofFY2019,increasingoverallresourceextractiontoabove90%,

• ContinuegrowingtheKarariresourcealongstrikeandatdepth,

• Maintain steady state production from theDeepSouth undergroundmine(450,000tpa)while exploring the resource at depth and considering futureoptionsforthisoperation,

• Following successful resource drilling of the Whirling Dervish resource,commencefullminedevelopmentandrampuptosteadystateproductionatWhirlingDervish(700,000tpa),

• ContinuegrowingtheWhirlingDervishresourcealongstrikeandatdepth,

• Maintainadisciplinedapproachtoprojectexecution–startwhenweneedto,aimforprojectstobeself-funded,ensurethesiteremainscashflowpositiveatalltimes,

• Commenceamajorexplorationprogramthroughoutthe“CorridorofRiches”andnearmineextensions,

• Growthecurrentgoldreservebase,

• Continue working on the strategy of base load feed from Carosue DamUnderground Mines (Karari and Whirling Dervish) with bolt on ‘growthoptions’toincreaseproduction,

• Optimising production through the Carosue Dam processing plant toincreaseoverallgoldproduction,includinginvestigatinggradeoptimisationopportunitiesandoverallproductionthroughputoptions,

• ContinuethetrajectoryofreducedAllInSustainingCosts,and

• Generatesustainingcashflows.

PrODuCTiON aND grOWTH OUTLOOKFORFY2019ANDBEYOND

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photo: Whirling Dervish – inside out 25

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InFY2019,goldproductionwillbeprincipallysourcedfromthe‘C’ZoneoftheThunderboxopenpitandKailisStage2openpit.SomeproductionwillbesourcedfromthedevelopingThunderboxundergroundmineandvariousstockpiles.

ProductionguidanceatTBOforFY2019is135,000to145,000ozs.

Saracen’sbusinessplanforTBOoverthenext2yearscomprises:

• Deliveryalignedtomeetorexceedthe7yearproductionoutlook,

• MaintainbaseloadproductionfromThunderboxopenpitswhileexploringopportunitiesforhighgradesatellitetopupfeed,

• ContinueminingKailisStage2satellitepittoprovidehighgradeorefeedtooptimiseoreblendingopportunitiesattheThunderboxmill,

• Continue developing the Thunderbox underground mine, commence undergroundresourcedrilling,andassessvariousfullscaleoptionsforthispotentiallylonglifemine,

• Continue working on Life of Mine strategy of base load feed from various sourcesadjacenttotheTBOmillwithbolton‘growthoptions’toincreaseproduction,

• PursuetheoptimaloperationoftheThunderboxmilltomaximisecashflowgeneration,

• Fundingallprojectdevelopmentthroughinternalcashflowgeneration,

• Commencemajorexplorationfocusonnearmineextensions–thebestspottofindanewmineisatanexistingmine,

• Growthecurrentgoldreservebase,

• ContinuethetrajectoryofreducedAllInSustainingCosts,and

• Generatesustainingcashflows

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photo: ROM loader operator at Thunderbox 27

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GO

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S (J

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C 20

12 C

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T)

Loca

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Dep

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M

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red

In

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ted

In

ferr

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Tota

l

tonn

es

g/t

oz

tonn

es

g/t

oz

tonn

es

g/t

oz

tonn

es

g/t

oz

K

arar

i O/P

21

,000

1.

3 90

0 2,

100,

000

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100,

000

230,

000

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10,0

00

2,40

0,00

0 1.

4 11

0,00

0

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ari U

/G

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3 21

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700,

000

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840,

000

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2 26

0,00

0 12

,000

,000

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4 1,

300,

000

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ervi

sh O

/P

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800,

000

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000

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16,0

00

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1 14

0,00

0

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vish

U/G

7,10

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3 53

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98,0

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4 63

0,00

0

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ty’s

/Elli

ots

120,

000

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000

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83,0

00

370,

000

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19,0

00

1,90

0,00

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8 11

0,00

0

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Pea

ks

40,0

00

2.3

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0 56

0,00

0 3.

4 61

,000

80

,000

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8 7,

000

680,

000

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71,0

00

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th W

est

33

0,00

0 0.

8 9,

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000

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inna

cles

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7 42

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6 82

,000

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lue

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na

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phyr

y O

/P

4,

200,

000

1.3

170,

000

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0 1.

2 84

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300,

000

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000

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orph

yry

U/G

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0 3.

3 31

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000

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0

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ion

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lar

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600,

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000

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allb

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000

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00

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000

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00

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0 63

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68

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,000

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terp

rise

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0,00

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2 10

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67

0,00

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2 47

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fari

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e 78

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0 50

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00

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p So

uth

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l

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re S

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tto

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e (M

angi

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0 90

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ainb

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th W

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ailis

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1 10

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re S

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000

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000

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0

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derb

ox M

iner

al R

esou

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000,

000

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230,

000

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00

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0,00

0 14

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0 66

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tal M

iner

al R

esou

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13

,000

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6 68

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000

39,0

00,0

00

1.7

2,10

0,00

0 15

0,00

0,00

0 1.

8 8,

600,

000

CAROSUE DAM THUNDERBOX

MINERAL RESOURCES aND ORE RESERvES STaTeMeNTas at 30 June 2018

For

per

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MINERAL RESOURCES aND ORE RESERvES Statement (continued)as at 30 June 2018

NIC

KEL

MIN

ERA

L R

ESO

UR

CES

(JO

RC

2012

CO

MP

LIA

NT)

Loca

tion

Dep

osit

M

easu

red

In

dica

ted

In

ferr

ed

Tota

l

tonn

es

Ni %

N

i ton

nes

tonn

es

Ni %

N

i ton

nes

tonn

es

Ni %

N

i ton

nes

tonn

es

Ni %

N

i ton

nes

M

assi

ve

20,0

00

7.6

1,50

0 20

,000

7.

5 1,

500

M

atri

x

52

,000

4.

1 2,

100

52,0

00

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2,10

0

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isse

min

ated

30

0,00

0 1.

6 4,

700

300,

000

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4,70

0

W

eak

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sem

inat

ed

48,0

00

1.8

840

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00

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l Am

orac

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0,00

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0 5,

100

260,

000

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0

To

tal M

iner

al R

esou

rces

0.0

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68

0,00

0 2.

1 14

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68

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0 2.

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THUNDERBOX

GO

LD O

RE

RES

ERVE

S (J

OR

C 20

12 C

OM

PLI

AN

T)

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tion

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e Ty

pe

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ved

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s

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babl

e R

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ves

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tal O

re R

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to

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to

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t oz

to

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K

arar

i U

G

-

-

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7

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ervi

sh

UG

-

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illio

n D

olla

r O

P

-

-

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100

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,800

,000

1

.1

100

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allb

rook

O

P

230

,000

1

.1

8,0

00

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00

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5

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terp

rise

O

P

170

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000

1

40,0

00

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0

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000

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eep

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h U

G

-

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-

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30,0

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3.0

4

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0

430

,000

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.0

42,

000

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ockp

iles

S 8

20,0

00

0.8

2

2,00

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-

-

-

8

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00

0.8

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aros

ue D

am O

pera

tions

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-Tot

al

1,

200,

000

1.1

41,0

00

15,0

00,0

00

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1,20

0,00

0 16

,000

,000

2.

3 1,

200,

000

Th

unde

rbox

* O

P

1,1

00,0

00

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4

6,00

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10,0

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unde

rbox

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G

-

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-

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.0

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anno

ckbu

rn

OP

-

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ailis

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P

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-

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7

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6,00

0

750

,000

1

.9

46,

000

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ockp

iles

S 1

,300

,000

1

.2

51,

000

-

-

-

1,3

00,0

00

1.2

5

1,00

0

Th

unde

rbox

Ope

ratio

ns S

ub-T

otal

2,40

0,00

0 1.

3 97

,000

22

,000

,000

1.

7 1,

200,

000

24,0

00,0

00

1.7

1,30

0,00

0

To

tal O

re R

eser

ves

3,

600,

000

1.2

140,

000

37,0

00,0

00

2.0

2,40

0,00

0 40

,000

,000

1.

9 2,

500,

000

CAROSUE DAM THUNDERBOX

Not

es:

All d

ata

roun

ded

to tw

o si

gnifi

cant

figu

res.

Rou

ndin

g er

rors

may

occ

ur.

Thun

derb

ox O

P in

clud

es b

oth

C a

nd D

Zon

e pi

ts

For

per

sona

l use

onl

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MINERAL RESOURCES aND ORE RESERvES Statement (continued)as at 30 June 2018

Notes to accompany Mineral Resources and Ore Reserves Statement (JORC 2012 compliant)

Tonnages, grades and contained metal have been rounded to reflect the accuracy of the calculations. Rounding errors may occur.

Please refer to Saracen’s ASX announcement: ‘Reserves Grow by 20% to 2.5Moz’, dated 1st August 2018 for further information relating to the 2018 Resources and Reserves statement as required under the relevant JORC Code. This announcement can be found on the Company’s website, www.saracen.com.au or on the ASX website www.asx.com.au

Competent Person Statements

The information in the report to which this statement is attached that relates to Exploration Results and Mineral Resources related to Gold is based upon information compiled by Mr Daniel Howe, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Daniel Howe is a full-time employee of the Company. Daniel Howe has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Daniel Howe consents to the inclusion in the report of matters based on his information in the form and context in which it appears.

The information in the report to which this statement is attached that relates to Exploration Results and Mineral Resources related to Nickel is based upon information compiled by Mr Lynn Widenbar, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy. Lynn Widenbar is a consultant to Saracen Mineral Holdings. Lynn Widenbar has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Lynn Widenbar consents to the inclusion in the report of matters based on his information in the form and context in which it appears.

The information in the report to which this statement is attached that relates to underground Ore Reserves at Deep South, Karari and Whirling Dervish is based upon information compiled by Stephen King, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy. Stephen King is a full-time employee of the Company. Stephen King has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Stephen King consents to the inclusion in the report of matters based on his information in the form and context in which it appears.

The information in the report to which this statement is attached that relates to all open pit Ore Reserves relating to Gold is based upon information compiled by Hemal Patel, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy. Hemal Patel is a full-time employee of the Company. Hemal Patel has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Hemal Patel consents to the inclusion in the report of matters based on his information in the form and context in which it appears.

The information in the report to which this statement is attached that relates to underground Ore Reserves at Thunderbox is based upon information compiled by Brad Watson, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy. Brad Watson is a consultant to Saracen Mineral Holdings through AMC Consultants. Brad Watson has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Brad Watson consents to the inclusion in the report of matters based on his information in the form and context in which it appears.

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CORPORATE GOvERNANCE STATEMENT

Principle Complied Comment

1 – Lay solid foundations for management and oversight

1.1 A listed entity should disclose:

(a) the respective roles and responsibilities of its board and management; and

(b) those matters expressly reserved to the board and those delegated to management.

The Company has a formal Board Charter (a copy is located on the Company’s website) which sets out those matters reserved for the Board and those delegated to management.

The Board’s functions include: developing and setting the Company’s strategic direction in conjunction with management, overall review of performance against targets and objectives, reviewing management’s performance, ensuring the Company has adequate systems and internal controls together with appropriate monitoring of compliance activities, approval and compliance with policies including health, safety and environment and reporting to shareholders on the direction and performance of the Company.

The Board has also established various committees to assist in carrying out its duties. These Committees include the Audit Committee, Risk and Sustainability Committee, the Remuneration and Nomination Committee and the Exploration and Growth Committee.

The Managing Director, supported by senior executives, is responsible for the day-to-day management of the Company’s affairs and the implementation of strategy and policy initiatives.

1.2 A listed entity should:

(a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and

(b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.

Before the Company proposes to appoint a new Director, appropriate checks are undertaken which include but are not limited to reviewing the person’s character, experience, education, work experience and criminal record. Interviews with the potential candidates are conducted by existing Directors to make sure their experience, personality and ethics are an appropriate fit for the strategic direction of Company. Appropriate discussions with third parties who know the proposed Director may also be undertaken.

Directors’ biographical details, including their relevant qualifications, experience and the skills they bring to the Board are detailed on the Company website and in the Annual Report. Details of any other public company directorships held within the last 3 years are also provided in the Annual Report. Director’s biographical details are also included in the notice of annual general meeting when a Director stands for re-election.

1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.

Written agreements are in place with each Director and Senior Executive setting out the terms of their appointment. Director remuneration details and key terms of the agreements with Senior Executives are included in the Remuneration Report within the Annual Report.

1.4 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

The Company Secretary, Mr Jeremy Ryan, is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. In this regard the Company Secretary has a direct line of communication with the Chair. Mr Ryan was appointed as Company Secretary on 5 December 2016.

In addition the Company Secretary has a reporting line to the Chief Financial Officer in relation to day to day operational matters.

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CORPORATE GOvERNANCE Statement (continued)


1 – Lay solid foundations for management and oversight (continued)


(a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them;

(b) disclose that policy or a summary of it; and

(c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either:

• the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or

• if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.

The Board has adopted a Diversity Policy which outlines the Company’s commitment to ensuring a diverse mix of skills and talent exists amongst its Directors, officers and employees. The Diversity Policy addresses equal opportunities in the hiring, training and career advancement of Directors, officers and employees. The Board proactively monitors the Company’s performance in meeting the standards and guidance outlined in this Policy.

A copy of the Diversity Policy is located on the Company’s website. The Company does not discriminate based on gender, age, ethnicity, religious or cultural background. The Company ensures that all employees are provided with the same opportunities through open and honest communication, training and development opportunities and annual remuneration reviews.

The Company implemented the following measurable gender diversity objectives in FY18:

• The Company will seek to align or exceed the mining industry average for female participation in the workforce subject to availability and suitability of candidates;

• Progress towards achieving the above objective is measured quarterly per year through a report to the Board and Senior Management on gender diversity statistics.

The following table shows the Company’s progress in relation to its measurable objective on gender diversity in FY18:

The Company’s progress in relation to its measurable gender diversity objectives is also included in the Annual Report.

Saracen end of Quarter % Mining Industry %

Q1 13.79 15.9Q2 13.70 15.9Q3 15.62 15.9Q4 16.45 15.9

The Group workforce gender profile as at 30 June 2018 is set out in the following table:

Proportion of Women

Board 1 out of 5 (20%)Senior Management *1 5 out of 32 (16%)Other Professional Staff *2 25 out of 100 (25%)Total Other Employees 33 out of 250 (13%)

1 Senior Management excludes the Managing Director who is included as part of the Board statistics.

2 Professional staff includes all degree qualified professional employees but excludes the Managing Director and Senior Management.

The Company is compliant with the Gender Equality Act 2012 (Cth) and a copy of the 2018 compliance report is available on the Company’s website.

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1 – Lay solid foundations for management and oversight (continued)


(a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and

(b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

The Board, with the assistance of the Remuneration and Nomination Committee, regularly monitors its performance and the performance of the Directors and Board Committees. This may occur through an internal review led by the Chairman, or be performed with the assistance of external advisers as considered appropriate.

During the year the Board internally discussed, reviewed and evaluated its performance with respect to their roles as Directors individually, as a Board and as Board Committees. Every three years an external party is engaged by the Company to facilitate a review of the Board and Directors individually. The next review by an external party is due to occur prior to the end of FY19.

Prior to appointing any Director a review process is undertaken to ensure any new Director skill set aligns with the Company’s strategic plan. Dr Roric Smith was appointed as a Director in FY18. Dr Smith is a geologist with extensive international and Australian experience who will bring considerable support to Saracen’s strategic plan.

Prior to the appointment of Dr Smith the Board reviewed its Committee structure and composition. Following this review, and Dr Smith’s appointment, the Board redistributed Directors responsibilities amongst the Committees and created a new Exploration and Growth Committee. This Committee is chaired by Dr Roric Smith and comprises all Directors and is supported by Daniel Howe (Chief Geologist), Simon Jessop (Chief Financial Officer) and Troy Irvin (Corporate Development Officer).

A copy of the Exploration and Growth Committee’s Charter is available on the Company’s website.

The Exploration and Growth Committee’s functions include assessing greenfields and brownfields exploration as well as organic/ inorganic growth.

In addition the Risk Management Committee was replaced in FY18 with the Risk and Sustainability Committee. Further information on the Risk and Sustainability Committee is included in section 7.1 below.


(a) have and disclose a process for periodically evaluating the performance of its senior executives; and

(b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

The Company has a process of conducting half yearly and annual performance reviews of all staff including Senior Executives. The performance of the Managing Director is evaluated by the Chairman with input from the Board. The review is then discussed with the Board. The Managing Director reviews the performance of senior executives. All senior executives, including the Managing Director, participated in half yearly and yearly performance evaluation processes in relation toFY18.

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2 – Structure the Board to Add value

2.1 The board of a listed entity should:

(a) have a nomination committee which:• has at least three

members, a majority of whom are independent directors; and

• is chaired by an independent director,

• and disclose:• the charter of the

committee;• the members of the

committee; and• as at the end of each

reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings.

The Board has constituted a Remuneration and Nomination Committee which currently comprises Mr Geoff Clifford, Ms Samantha Tough and Dr Roric Smith, all of whom are considered to be independent non-executive Directors.

Mr Geoff Clifford, an independent non-executive Director, is the Chair of the Committee.

A copy of the Remuneration and Nomination Committee Charter is available on the Company’s website.

A total of two Remuneration and Nomination Committee meetings were held in FY18. Details of each member’s attendance at meetings of the Remuneration and Nomination Committee is set out below:

Member Attended Held

Geoff Clifford (Chair) 1 1

Mark Connelly 1 1

Martin Reed 1 1

Samantha Tough 2 2

Dr Roric Smith 1 1

* The Board re-allocated the composition of the Remuneration and Nomination Committee to the current membership as of 19 October 2017

* Mr Mark Connelly resigned from the Board effective 23 November 2017.

2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

The Company seeks to structure its Board so as to add value through an appropriate composition with a balance of the different attributes, skills and experience relevant to the Company’s operations and strategic direction. The effectiveness and efficiency of the Board is achieved through the Directors having substantial knowledge of and experience in the following main areas, operational management, strategy, project development, capital markets and mergers & acquisitions, finance, geology & exploration and legal & corporate governance.

Each Director has right to access all Company information and all staff including senior management. Directors have the right, in connection with the discharge of their duties and responsibilities, to seek independent professional advice at the Company’s expense within guidelines provided in the Company’s Board Charter.

The following table summarises some of the key skills and experience of the incumbent Board. Numbers are out of 5 being the total number of Directors.

Area Skill and ExperienceNumber of Directors

Operational Management

Senior executive experience in operational management within a medium to large entity

5

Strategy Senior executive experience in setting strategy within a medium to large scale entity

5

Project Development

Senior executive experience in delivery of capital projects

5

Capital Markets & Mergers and Acquisition

Senior executive experience in capital markets and / or mergers and acquisition

5

Finance Senior executive experience in financial accounting and reporting

2

Geology & Exploration

Senior executive experience in mineral exploration within a large scale entity

3

Legal & Corporate Governance

Experience within a large scale entity of legal/regulatory and governance standards

5

Experience as Non-executive Director

Experience as a Non-executive Director on at least 1 other medium to large cap listed company

4

Tertiary / professional qualification

Finance/Business Engineering Geology Legal Governance (AICD)

1 2 1 1 4

* On 4 July 2017 Dr Roric Smith was appointed to the Board. Dr Smith is a geologist with extensive international and Australian experience and has held numerous senior executive positions in the mining industry.


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2 – Structure the Board to Add value (continued)


(a) the names of the directors considered by the board to be independent directors;

(b) if a director has an interest, position, an association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and

(c) the length of service of each director.

The following Directors are currently considered by the Board to be independent – Mr Geoff Clifford (Chair) (5 years of service), Mr Martin Reed (6 years), Ms Samantha Tough (5 years) and Dr Roric Smith (1 year).

Mr Raleigh Finlayson (5 years as MD) is not considered to be independent as he is an executive of the Company.

2.4 A majority of the board of a listed entity should be independent directors.

A majority of the Directors are independent. At the date of this report, four of the five Directors are considered to be independent. The only non-independent director is the Managing Director as he is an employee of the Company.

2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.

Mr Geoff Clifford is the Chair of the Company and is an independent, non-executive Director.

2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.

New Directors are provided with an induction on the Company’s governance framework and operations following commencement by meeting with the Chair, Board and Senior Executives.

As part of the induction each new Director is provided with the Company’s Corporate Governance Manual which contains information on the Company, fellow Directors, copies of the Constitution, Board committee charters, Policies and associated material.

Directors are encouraged to continue to expand their knowledge base and professional skills through attendance at suitable seminars and conferences. This includes undertaking finance related courses for directors whose background comes from disciplines outside of the accounting and finance field.

Directors have the right, in connection with the discharge of their duties and responsibilities, to seek independent professional advice at the Company’s expense within guidelines provided in the Company’s Board Charter.

In order to assist in maintaining Director’s operational understanding of the Company Directors conduct one on one sessions with staff members including when Directors attend site for Board meetings. Directors then discuss feedback received from these meetings with the Board.

3 – Act Ethically and Responsibly


(a) have a code of conduct for its directors, senior executives and employees; and

(b) disclose that code or a summary of it.

The Board’s policy is that the Directors and management should conduct themselves with the highest ethical standards. All Directors and employees are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

The Board has adopted a Code of Conduct which sets out standards for appropriate ethical and professional behaviour that applies to all employees, including Directors and management, when dealing with each other, shareholders, customers and the broader community. In addition to the Code of Conduct, the Company has an Anti-Bribery and Corruption Policy.

A copy of the Company’s Code of Conduct and the Anti-Bribery and Corruption Policy are available on the Company’s website.

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4 – Safeguard Integrity in Corporate Reporting


(a) have an audit committee which:

• has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and

• is chaired by an independent director, who is not the chair of the board,

and disclose:

• the charter of the committee;

• the relevant qualifications and experience of the members of the committee; and

• in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings.

The Board has constituted an Audit Committee which is currently comprised of Ms Samantha Tough, Mr Geoff Clifford and Mr Martin Reed all of whom are independent non-executive Directors.

Ms Samantha Tough, an independent non-executive Director, is the Chair of the Committee.

The Audit Committee Charter is located on the Company’s website.

The relevant qualifications and experience of the Committee members is included in Directors’ Report contained in the Annual Report.

A total of two Audit Committee meetings were held in FY18. Details of each member’s attendance at meetings of the Audit Committee is set out below:


Samantha Tough(Chair) 2 2

Martin Reed 1 1

Geoff Clifford 2 2

Mark Connelly 1 1

* The Board re-allocated composition of the Audit Committee to the current membership as of 19 October 2017.


4.2 The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

The Board receives a written declaration from the Managing Director and the Chief Financial Officer in accordance with section 295A of the Corporations Act. The declaration provides that, to the best of their knowledge and belief, the accounting systems and financial records are founded on a sound system of risk management and internal control and that the system is operating effectively in relation to financial reporting risks.

4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.

The Company’s external auditor is invited to, and attends, the Company’s Annual General Meeting. The auditor’s presence is made known to the meeting and shareholders are provided with an opportunity to ask questions of them in relation to the accounts of the Company and the performance and findings of the audit.

5 – Make Timely and Balanced Disclosure


(a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and

(b) disclose that policy or a summary of it

The Board has adopted a Continuous Disclosure Policy which raises awareness of the Company’s obligations under the continuous disclosure regime; establishes a process to ensure that information about the Company, which may be market sensitive and which may require disclosure, is brought to the attention of the person(s) primarily responsible for ensuring that the Company complies with its continuous disclosure obligations in a timely manner and is kept confidential; and sets out the obligations of Directors, officers, employees and contractors of the Company to ensure that the Company complies with its continuous disclosure obligations.

A copy of the Continuous Disclosure Policy is located on the Company’s website.

CORPORATE GOvERNANCE Statement (continued)F

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6 – Respect the Rights of Security Holders

6.1 A listed entity should provide information about itself and its governance to investors via its website.

The Company provides information about itself and its governance to investors via its website. The Corporate Governance tab/menu provides access to all Committee Charters and other relevant Corporate Governance Policies.The Company’s website also includes copies of its annual reports and financial statements, copies of its ASX announcements, copies of Notices of Meetings, presentations, as well as an overview of the Company’s business activities in separately designated areas of the website.

6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.

The Board aims to ensure that shareholders are provided with all of the information necessary to assess the performance of theCompany. The Company follows the principles of Continuous Disclosure to ensure all investors are fully informed on the activities of the Company.The Managing Director is responsible for other investor relations activities with the assistance of the Corporate Development Officer and the Company Secretary.In FY18 the Company conducted webcasts for investors following the release of material ASX announcements, including quarterly reports. The Company maintains an investor relations calendar which lists seminars, events and shareholder briefings at which the Company will attend or present.In FY18 the Board adopted a Shareholder Communications Policy (located on the Company’s website) which outlines the Company’s commitment to ensuring transparent, timely and accurate communications to shareholders.

6.3 A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.

The Board notifies all shareholders with a notice of general meeting so they can be fully informed of all matters to be put to the meeting and encourages shareholders to vote and attend these shareholder meetings.

6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.

The Company, via its share registry, provides the capability for shareholders to elect to receive electronic communications from the Company through direct emails - through its website and via the share registry. Electronic contact details are provided on the Company’s website.

7 – Recognise and Manage Risk

7.1 The board of a listed entity should:(a) have a committee or

committees to oversee risk, each of which:• has at least three members,

a majority of whom are independent directors; and


and disclose:• the charter of the

committee;• the members of the

committee; and• as at the end of each

reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; OR

(b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.

n/a

In FY18 the Board established the Risk and Sustainability Committee which replaced the Risk Management Committee.The Charter for the Risk and Sustainability Committee is located on the Company’s website. The purpose of the Committee is to assist the Board to manage risk and ensure the Company operates in a sustainable manner including in relation to environment and community.The Board has a formal overarching Risk Management Policy to govern the management of risks and has established systems for the management of its material risks. Management of risks is divided between the Audit Committee and the Risk and Sustainability Committee. The Risk and Sustainability Committee is currently comprised of Directors Mr Martin Reed (Chair), Dr Roric Smith and Mr Raleigh Finlayson. Each of Messer’s Reed and Smith are considered to be independent, non-executive directors and hence the majority of the Risk and Sustainability Committee members are independent. The Chair of the Risk and Sustainability Committee, Mr Reed, is an independent, non-executive Director.The skills, experience and qualifications of those individuals together with details of their attendance at meetings held during the reporting period are included in the Directors’ Report in the Annual Report. The Risk and Sustainability Committee is assisted by other management personnel as required and meets frequently to monitor the Company’s progress in relation to sustainability initiatives, identify risks and monitor mitigation strategies and outcomes. The Risk and Sustainability Committee reports to the Board on a quarterly basis and risk management is a standing agenda item for all regular Board Meetings. The operations are visited twice yearly by the Risk and Sustainability Committee.Details of the Audit Committee are included in section 4.1 above.The Company’s Risk Management Policy and the Risk and Sustainability Committee Charter can be accessed on the Company’s website (www.saracen.com.au) under the Corporate Governance section. A total of four Risk and Sustainability Committee meetings were held in FY18. Details of each member’s attendance at meetings of the Risk and Sustainability Committee is set out below :


Martin Reed (Chair) 4 4Roric Smith 4 4Raleigh Finlayson 4 4

* The Board re-allocated composition of the Risk and Sustainability Committee to the current membership as of 19 October 2017.

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7 – Recognise and Manage Risk (continued)

7.2 The board or a committee of the board should:

(a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and

(b) disclose, in relation to each reporting period, whether such a review has taken place

The Company has, and continues to, undertake various organisation wide risk reviews to identify potential business risks which are then assessed and ranked using the Company’s risk matrix. The effectiveness of controls in place to address each risk is reviewed on a regular basis and, where the residual risk is considered outside of acceptable limits, further controls and risk mitigation measures are developed and implemented.


(a) if it has an internal audit function, how the function is structured and what role it performs; OR

(b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.

n/a

The Company does not have a formal internal audit function. The Audit Committee and the Risk and Sustainability Committee monitor the risk factors of the Company in place of an internal audit function.

The Company’s Management periodically undertakes an internal review of financial systems and processes and where systems are considered to require improvement these systems are developed.

The Company’s external auditors also review the process and procedures related to the financial and accounting functions of the Company.

CORPORATE GOvERNANCE Statement (continued)F

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7 – Recognise and Manage Risk (continued)

7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.

The Company has exposure to the following material risks:Gold Price: The Company’s revenue comes from the sale of gold in Australian dollars which is a combination of the US dollar gold price and A$:US$ exchange rates. The US gold price fluctuates and is affected by many factors including the relationship between global supply and demand, forward selling by producers, costs of production and general global economic conditions which also affects exchange rates. To mitigate the impact of price fluctuations, the Company has entered into hedging programs, in Australian dollars, for a portion of its gold production. The level of hedging is actively reviewed by management and the Board, in accordance with a Board approved hedging policy, with the assistance of expert external consultants. Costs of Production: The Company has many cost inputs into its production profile and maintaining a tight reign over these costs is essential to maintaining the financial health of the business and maintaining shareholder value. To assist in controlling these inputs, the Company has entered into long term contract for most of its larger cost inputs including mining contractors, diesel, lime and cyanide These long term contracts support Company’s 7 year plan which was announced to the market in FY18. The Company also has site specific Enterprise Agreements with its workforce. These mechanisms help provide a firm cost base on which the Company can operate and maintain its business margins. In FY18 the Company also implemented the ‘Think and Act Like Owners’ program which is directed at encouraging employees to present business improvement initiatives. Exploration Success and Project Development: The Company has a finite economic life based on existing mineral resources. The Company requires continued exploration success in finding new projects or extending the life of existing projects and/or successful acquisitions for continuity of production. The Company undertakes a targeted exploration programme and employs the best technical personnel to assess all existing and potential new opportunities both within and outside its existing project portfolio. These activities are monitored and reviewed quarterly by the Exploration and Growth Committee.Mineral Resource: The Company has numerous Mineral Resources which it bases its future production and annual budgets on. The Mineral Resource estimate is the product of many inputs and assumptions, and by nature is not a precise determination of quality and quantity of gold available for economic assessment. Given the sampling used to define and inform the mineral resources can be broadly spaced, it is important that appropriate measures are taken to mitigate the risk of poor Mineral Resource estimation. The Company has implemented a rigorous internal peer review process that focuses on all critical steps in building a Mineral Resource estimate. This process aims to validate the process and assumptions used to create the Mineral Resource. These reviews are carried out by senior employees who have had specific technical training in the appropriate area of estimation. Further to this the Company also has the Mineral Resource estimates reviewed by external consultants who specialise in the estimation of Mineral Resources. These external reviews are conducted annually. All resource activities are monitored and reviewed by the Exploration & Growth Committee.Environmental: The Company is subject to, and responsible for, ensuring compliance with various regulations, licenses, approvals and standards so that its activities do not cause unauthorised environmental harm. Environment risk is currently overseen by the Risk and Sustainability Committee. Through its ongoing management of environmental activities at its operating mines, the Company has been able to operate in an environmentally sustainable and responsible manner. All environmental activities are monitored and reviewed by the Risk and Sustainability Committee.Social: The Company recognises that a failure to manage stakeholder expectations may lead to disruption to the Company’s operations. As such the Company’s Community Policy is designed to support the Company’s objectives to make a positive difference to its stakeholders through building relationships based on trust, mutual respect and partnership. To assist in this regard the Company holds two Board meetings per year in regional locations associated with its operations to provide the opportunity for direct stakeholder engagement with Directors. The Company is proud to be involved in and supportive of community groups, organisations and charities in the region in which it operates. All social activities are monitored and reviewed by the Risk and Sustainability Committee.Sustainability: In FY18 the Company established the Risk and Sustainability Committee which is responsible for overseeing risk in relating to health, safety, environment, community and sustainability. Additional disclosure on sustainability is included in the Company’s Sustainability Report located on the Company’s website. The Company has a Risk Management Policy which sets out the Company’s risk management systems and processes. The Company’s Risk Management Standard provides detail as to how the Company fulfils the expectations and requirements set out in the Risk Management Policy. Pursuant to the Risk Management Standard the Company has, and continues to, undertake various organisation wide risk reviews to identify potential business risks which are then assessed and ranked using the Company’s risk matrix. The effectiveness of controls in place to address each risk is reviewed on a regular basis and, where the residual risk is considered outside of acceptable limits, further controls and risk mitigation measures are developed and implemented.

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8 – Remunerate Fairly and Responsibly


(a) have a remuneration committee which:

• has at least three members, a majority of whom are independent directors; and


and disclose:

• the charter of the committee;

• the members of the committee; and

• as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; OR

(b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.

n/a

The Board has established a Remuneration and Nomination Committee which comprises Mr Geoff Clifford, Ms Samantha Tough and Dr Roric Smith all of whom are independent non-executive Directors.

Mr Clifford, an independent non-executive Director is the Chair of the Committee.

A copy of the Remuneration and Nomination Committee Charter is located on the Company’s website.

The relevant qualifications and experience of the Committee members is included in Directors’ Report contained in the Annual Report.

A total of two Remuneration and Nomination Committee meeting were held in FY18. Details of each member’s attendance at meetings of the Remuneration and Nomination Committee is set out below:


Geoff Clifford (Chair) 1 1

Mark Connelly 1 1

Martin Reed 1 1

Samantha Tough 2 2

Dr Roric Smith 1 1

* The Board re-allocated the composition of the Remuneration and Nomination Committee to the current membership as of 19 October 2017.


8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.

The structure of non-executive Director remuneration is clearly distinguishable from that of executive Directors and other Senior Executives. Non-executive Directors are remunerated on a fixed fee basis for time and responsibility as part of an aggregate pool of remuneration approved by shareholders. The Non-executive Directors have the ability to receive performance rights and / or options under the Company’s shareholder approved long term incentive plan. At present no performance rights or options have been allocated under the plan to the Non-executive Directors. Senior Executives (including the Managing Director) are remunerated on an annual basis based on a combination of fixed remuneration and variable remuneration, comprising – short term and long term incentives.

Further details regarding the remuneration practices for the Company’s Key Management Personnel (including the Managing Director) are included in the Remuneration Report that forms part of the Directors’ Report within the Annual Report.

8.3 A listed entity which has an equity-based remuneration scheme should:

(a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and

(b) disclose that policy or a summary of it

The Company issues equity based remuneration to its employees through its Performance Rights Plan. The Plan details the terms and conditions under which performance rights can be granted and stipulates that a Participant in the Plan must not enter into any arrangement for the purpose of hedging, or otherwise affecting, their economic exposure to their Performance Rights.

The Performance Rights Plan has been approved at a meeting of shareholders. The Performance Rights Plan was updated and approved at the Company’s 2017 AGM.

Details of Performance Rights that have been issued to employees and the performance hurdles attaching to those Rights are listed in the Remuneration Report.

A copy of the Company’s Performance Rights Plan is available on the Company’s website.

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The Directors of Saracen Mineral Holdings Limited (“Saracen” or “the Company”) present their report, together with the financial statements on the consolidated entity consisting of Saracen Mineral Holdings Limited and its controlled entities (“the Group”) for the financial year ended 30 June 2018. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

DIRECTORS

The names and particulars of the Company’s Directors in office during the financial year and at the date of this report are as follows. Directors held office for this entire period unless otherwise stated.

Geoffrey Clifford Non-Executive Chairman (appointed Director 1 October 2013 & Chairman 26 November 2014) (Chair of the Remuneration & Nomination Committee, Member of the Audit and Exploration & Growth Committees)

Mr Clifford is an accountant with more than 35 years’ experience in senior accounting, finance and company secretarial roles. He holds a Bachelor of Business degree from Curtin University and is a FCPA, FGIA and FAICD. Mr Clifford is a professional company director. In addition to his role at Saracen, he is currently serving as the non-executive Chairman of Tyranna Resources Ltd and is also a non-executive director on the Board of Independence Group NL. From 2007 to 2011, he was a non-executive director (including as Chairman for the period 2008 to 2011) of Atlas Iron Limited. Prior to this, he spent eight years as the General Manager Administration and Company Secretary of Portman Limited.

Mr Clifford became Non-Executive Chairman of the Company upon the retirement of the then Chairman, Mr Staltari, at the conclusion of the Annual General Meeting held on 26 November 2014.

During the past three (3) years Mr Clifford has held directorships in the following other public listed companies:

Company Appointed Resigned

Independence Group NL December 2012 Current

Tyranna Resources Limited January 2018 Current

Raleigh Finlayson

Managing Director (appointed 2 April 2013) (Member of the Risk Management & Sustainability and Exploration & Growth Committees)

Mr Finlayson is a mining engineer, having studied at the Western Australian School of Mines and is the holder of a First Class Mine Managers Certificate and a Graduate Certificate in Applied Finance and Investment. He is a member of the Australasian Institute of Mining and Metallurgy. Mr Finlayson has over 18 years of technical and operational experience in the mining industry in multiple disciplines including both underground and open pit operations. Since joining the Company, he has overseen the Feasibility Studies and development of both the Carosue Dam and Thunderbox operations. He held position of Chief Operating Officer before being appointed Managing Director in April 2013.

Mr Finlayson does not hold, and has not over the last three (3) years held, a directorship in any other public listed company.

Martin ReedNon-Executive Director (appointed 24 August 2012) (Chair of the Risk Management & Sustainability Committee, Member of the Audit and Exploration & Growth Committees)

Mr Reed is a mining engineer (BE Mining, Grad Dip Management, AICD Diploma) with over 35 years’ experience in operations management and project development across a range of commodities, countries and size of operations. Recent roles have included Chief Operating Officer and Project Manager for a number of metals companies including Sirius Resources, Sandfire Resources, St Barbara Limited, Paladin Energy Ltd and Windimurra Vanadium Limited. Prior to these appointments, Mr Reed held a number of senior executive positions in the mining industry including roles where he was responsible for the planning and development of several large mining operations in remote locations.

Mr Reed does not hold, and has not over the last three (3) years held, a directorship in any other public listed company.

DIRECTORS’ REPORTF

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Samantha Tough Non-Executive Director (appointed 1 October 2013) (Chair of the Audit Committee, Member of the Remuneration & Nomination and Exploration & Growth Committees)

Ms Tough completed a Bachelor of Laws and Bachelor of Jurisprudence at the University of Western Australia and worked as a barrister and solicitor before progressing to the commercial sector. She is a Fellow of the AICD. Ms Tough is a professional company director with more than 18 years’ experience on public and private company boards. She has a depth of industry experience in resources and energy. Ms Tough’s executive roles included General Manager North West Shelf at Woodside Energy Ltd, Director Strategy for Hardman Resources Ltd, Senior Vice President Natural Resources at the Commonwealth Bank and Project Director for the Pilbara Power Project. Ms Tough is also a Non-Executive Director of Synergy and The Clean Energy Finance Corporation.

Ms Tough became Chair of the Audit Committee upon the resignation of the then Chairman, Mr Connelly, at the conclusion of the Annual General Meeting held on 23 November 2017.

During the past three (3) years Ms Tough has held directorships in the following other public listed companies:


Cape plc January 2015 January 2016

Molopo Energy Limited December 2014 April 2017

Strike Resources Limited January 2012 November 2015

Aurora Labs Limited June 2017 July 2017

Roric Smith

Non-Executive Director (appointed 4 July 2017) (Chair of the Exploration & Growth Committee, Member of the Risk Management & Sustainability and Remuneration & Nomination Committees)

Dr Smith is a geologist who has held several senior technical and management positions. He has played key roles in the discovery and development of exploration and mining projects both locally and internationally in the gold-copper sector. He is currently a Non-Executive Director of Sandfire Resources and a Principal Consultant with HiSeis, specialists in hard-rock seismic acquisition and processing. He also serves on the Advisory Board of the Core to Crust Fluid Systems (CCFS) CRC at Macquarie University, Sydney. Dr Smith’s previous positions include Vice-President, Discovery for Evolution Mining and Senior Vice-President, Global Greenfield Exploration at AngloGold Ashanti.

During the past three (3) years Dr Smith has held directorships in the following other public listed companies:


Sandfire Resources NL January 2017 Current

Mark Connelly

Non-Executive Director (appointed 1 May 2015 / Resigned 23 November 2017)

Mr Connelly holds a Bachelor of Business degree from Edith Cowan University and has over 29 years’ experience covering the development, construction and operation of mining projects across a variety of commodities (including gold and base metals) and jurisdictions (including Australia, West Africa, North America and Europe).

Most recently Mr Connelly was Managing Director of Papillon Resources and was instrumental in the US$570m takeover of Papillon by B2Gold Corp in October 2014. Prior to Papillon, Mr Connelly was Chief Operating Officer of Endeavour Mining Corporation, following its merger with Adamus Resources Limited, where he was Managing Director and CEO. Mr Connelly has also held senior executive positions with Newmont Mining Corporation and Inmet Mining Corporation.

DIRECTORS’ RepoRt (continued)F

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COMPANY SECRETARY

Jeremy Ryan

(appointed 5 December 2016)

Mr Ryan joined Saracen in March 2012 as Manager - Legal. Mr Ryan was admitted to practice in 1998 and has extensive experience in advising on the development and operation of mining and infrastructure projects. Prior to joining the Company Mr Ryan worked as a lawyer for a native title representative body, State and Federal government departments and in the Finance & Projects team of a large international law firm.

Mr Ryan does not hold, and has not over the last three (3) years held, a directorship in any other public listed company.

INTERESTS IN SHARES AND PERFORMANCE RIGHTS OF THE COMPANY AND RELATED BODIES CORPORATE

As at the date of this report, the direct and indirect interests of the Directors and their related parties in the Shares and Performance Rights of Saracen were:

director ordinary Shares performance Rights over ordinary shares - unlisted

Geoffrey Clifford - -

Raleigh Finlayson 4,016,819 845,000

Mark Connelly (resigned 23 November 2017) - -

Martin Reed 30,000 -

Samantha Tough - -

Roric Smith - -

PRINCIPAL ACTIVITIES

The principal activity of the Group during the year was gold mining, processing & sales and mineral exploration.

REVIEW AND RESULTS OF OPERATIONS

Overview

Saracen Minerals Holdings Limited is an ASX-listed gold company (ASX:SAR) producing ~ 320,000 ounces per annum from its two operations in Western Australia:

1. Carosue Dam approximately 120km north-east of Kalgoorlie, and

2. Thunderbox approximately 45km south of Leinster.

The Company’s Head Office is in Perth, Western Australia.


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Saracen Mineral Holdings Limited owns 100% of the Carosue Dam Operations (“CDO”) through its wholly owned subsidiary Saracen Gold Mines Pty Ltd. CDO operations include the Carosue Dam Project (comprising the Karari and Whirling Dervish gold deposits), the Porphyry Project (comprising the Porphyry, Million Dollar, Enterprise, and Wallbrook deposits), and the Deep South Project (comprising of the Deep South and Safari Bore deposits). Saracen acquired the CDO assets in 2006 and commenced commercial gold production in 2010. Since then, Saracen has produced over 1.2 million ounces of gold from open pits and underground mines at CDO. In April 2017, Saracen began the development of its 15th mine in the area with the commencement of the Whirling Dervish underground mine.

Saracen’s CDO tenement holdings are located in one of the world’s most prospective gold provinces, incorporating the Laverton and Keith Kilkenny Tectonic Zones, north-east of Kalgoorlie, Western Australia. This province is home to several world class gold mines and deposits including Sunrise Dam, Granny Smith, and Wallaby. In excess of 23 million ounces of gold in resources have been found and/or brought into production in this province. Saracen is building a long-term strategic infrastructure and resource position in this area.

Supporting the mines, CDO comprises a processing plant, two accommodation villages (with the ability to support 400 people), various water and power infrastructure facilities and is located 120km north north-east of Kalgoorlie. The CDO processing plant was originally commissioned in November 2000 and has a nameplate capacity of 2.4Mtpa.


Saracen Mineral Holdings Limited owns 100% of the Thunderbox Operations (“TBO”) through its wholly owned subsidiary Saracen Metals Pty Ltd. Saracen acquired the TBO assets in 2014 and commenced commercial gold production in 2016. TBO operations include the Thunderbox Project (comprising the Thunderbox, Rainbow and Mangilla gold deposits), the Kailis Open Pit, the Bannockburn Project (comprising the Bannockburn and North Well gold deposits) and the Waterloo Project (comprising the Waterloo and Amorac nickel deposits). In October 2017, Saracen poured the one millionth ounce of gold produced from the Thunderbox Operations and in June 2018, with the cutting of the portal and establishment of an exploration drill drive, began development of the potential Thunderbox underground mine.

TBO is located in the highly prospective Yandal and the Agnew-Wiluna Belts in the North Eastern Goldfields of Western Australia, centred on the Thunderbox Open Pit and CIL gold treatment plant located 45km south of the town of Leinster in Western Australia, immediately adjacent to the sealed Goldfields Highway.

The Thunderbox processing facility, which was recommissioned by Saracen during 2015 incorporates a single-stage crusher, a SAG mill and a ball mill as well as conventional CIL leaching and elution circuits. Nameplate capacity of the TBO processing plant is 2.5Mtpa, although, during FY2018 the processing plant did at times, operate at a run rate of up to 2.8Mtpa. Existing infrastructure comprises a 268 person accommodation village, an airstrip, power and water infrastructure, Goldfields Gas Pipeline spur, bore field water supply and telecommunication services.

During FY2018, Saracen completed mining Stage 1 of the Thunderbox open pit, known as A Zone and commenced mining activities at the Thunderbox open pit C Zone. In addition, Saracen commenced and completed mining at the Stage 1 Kailis open pit.

Production


For the financial year ended 30 June 2018 (“FY2018”), gold production from the CDO was 171,301oz (2017: 155,970oz) at an All in Sustaining Cost (“AISC”) of $1,199/oz (2017: $1,413/oz).

Carosue Dam Quarter

Unit September 17 December 17 March 18 June 18 FY2018

Mill Production

Total Ore Milled t 646,000 633,000 589,000 611,000 2,479,000

g/t 2.2 2.1 2.5 2.5 2.3

Recovery % 93.0% 93.1% 93.2% 92.6% 93.0%

Gold Produced oz 43,083 40,371 43,167 44,680 171,301

Underground Mining

Total Ore Mined t 424,000 359,000 472,000 463,000 1,718,000

g/t 3.2 2.9 2.9 2.8 2.9

Contained Ounces oz 43,217 33,008 44,329 42,060 162,614


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During FY2018, the Karari underground mine realised a steady state production rate of greater than 1.0Mtpa. Total ore production for the year was 1,134,000t at 2.87g/t for 104,000 contained ounces - a 30% increase to tonnage from the previous year. Underground drilling at Karari has continued throughout the year from two additional drill platforms with the stated aim of providing infill drilling and increased resource confidence.

A number of large capital projects are currently in progress at Karari. The new heavy vehicle workshop construction is on schedule and a contract has been awarded for the construction of a paste backfill plant capable of producing 110 to 120m³/hr of paste for filling stopes in the Karari underground mine (and potentially the Whirling Dervish underground mine also).

As planned, the FY2017 focus at Deep South had been to ramp up ore production to a sustainable profile whilst carrying out the necessary work to increase the understanding of the orebody, and contribute positively towards production during FY2018. This provided a solid platform leading into FY2018 and the improved understanding has enabled development and production activities to successfully be de-coupled during the year allowing ore production to sustain an average 48,000 ore tonnes per month. Ore production for FY2018 from Deep South totalled 584,000t @ 3.09g/t for 58,000 contained ounces.

Production will taper off at Deep South during FY2019. This is in line with the Company’s strategy of realising bulk underground production within direct trucking distance of the CDO mill. The Karari / Dervish mine complex is expected to fill the 2.4Mtpa CDO mill from the commencement of FY2020.

Development of the Whirling Dervish decline (which was previously developed to the underground drilling platform), re-commenced during the June 2018 quarter after approval was gained to establish the underground mine for production activities in FY2019

At the end of the financial year the decline has advanced 51m vertical below the access portal (231m below the surface). Ore mineralisation was intersected in the underground workings which will be established for production activities during FY2019.

The CDO processing plant continued to perform at above nameplate capacity during FY2018, with 2,479,000 tonnes of ore milled. The plant ran at an average head grade of 2.3g/t which reflected the contribution from high grade underground ore sources, namely Karari and Deep South, supplemented with lower grade stockpiles and quantities of the third party ore. Overall recovery for the year was 93.0% which is in line with the long term average for CDO. Total gold produced for the year were 171,301oz.


During FY2018, gold production from the Thunderbox Operations was 145,152oz (2017: 116,837oz) at an AISC of $1,071/oz (2017: $1,253/oz).

Thunderbox Quarter

Unit September 17 December 17 March 18 June 18 FY2018

Mill Production

Total Ore Milled t 554,000 676,000 710,000 716,000 2,656,000

g/t 2.2 1.8 1.7 1.6 1.8

Recovery % 93.3% 93.6% 94.6% 94.1% 93.9%

Gold Produced oz 37,190 37,152 36,560 34,250 145,152

Open Pit Mining

Total Mining BCM 4,425,000 3,508,000 2,154,000 1,819,000 11,906,000

Total Ore Mined t 575,000 912,000 913,000 1,010,000 3,410,000

g/t 2.3 1.5 1.9 1.4 1.7

Contained Ounces oz 41,785 44,312 54,557 44,787 185,441

Open pit mining at the Thunderbox A Zone pit and Kailis Stage 1 pit were completed during the year. Total ore production for the year from A Zone was 735,000t at 2.55g/t for 60,000 contained ounces and the Kailis Stage 1 produced 871,000t at 2.31g/t for 65,000 contained ounces of which 32,000 ounces remain on stockpile at the end of FY2018. The Kailis Stage 2 open pit is scheduled to commence production in December 2018.

Mining from the Thunderbox C Zone pit was ongoing with this ore supply replacing the A Zone pit as the base load feed for the Thunderbox processing plant. Total ore production for the year from C Zone was 1,804,000t at 1.04g/t for 60,000 contained ounces.


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Performance during the year of the Thunderbox ore body was excellent with 2.5Mt mined at an average grade of 1.5g/t and a yearly mine call reconciliation factor of 101% of the contained ounces.

In late FY2018, underground mining also commenced at Thunderbox with the cutting of two portals in the southern end of the A Zone pit. The focus for FY2019 will be on establishing the drilling platform to allow the ore body to be delineated at depth, through a methodical drilling program. A modest amount of ore will be delivered during the year as part of these development activities.

In FY2018, the Thunderbox processing plant exceeded nameplate capacity for the first time since its re-start with a total of 2,656,000 tonnes milled at an average cost of $20/t. The inclusion of Kailis oxide ore in the mill blend contributed to the increase in throughput rates and provided a higher grade supplement for the predominantly fresh ore sourced from the Thunderbox pits (A and C zones). An average feed head grade of 1.8 g/t was realised (a 5% increase on FY2017) and the plant recovery was 93.9% (a 2.5% increase over FY2017). Recoveries progressively increased by an average of 0.3% each quarter following the completion of several improvement and optimisation projects across the CIL and gravity circuits and averaged 94.3% during the second half of the year. The total ounces produced were 145,152oz.

Health and Safety

The Saracen Group Lost Time Injury Frequency Rate (“LTIFR”) for the 12 months to June 2018 was 1.0 (2017: 3.7), a 72% improvement and the Total Recordable Incident Frequency Rate (“TRIFR”) was 11.7 (2017: 18.3), a 36% improvement. It is particularly pleasing to report these significant improvements in FY2018 for both of these key lag indicators – a testament to Saracen’s continuing business improvement and maturity.

During the year, the focus has been on ensuring that Saracen has a Safety Management System based on the risk management of principal hazards, including the regular review and audit of the Company’s critical controls. The monitoring and interpretation of both lead and lag indicators is a core area as part of our drive to achieve and ensure a safe place of work.

To ensure the ongoing readiness of the Company’s Operational Emergency Response Teams (“ERT”), training and enhancement of the teams’ capabilities continued throughout the year. The value of this was demonstrated during March 2018 when the ERT team was called upon to assist in the management of a small gold room fire at the Thunderbox operation. Pleasingly, this incident was skilfully contained with no injuries and minimal impact on gold production.

During FY2018, the Company has seen considerable improvements in the Health and Safety area but also recognise that further improvements are still required to strive for an injury free workplace. Throughout the year, the Saracen Board and Executive have made themselves available to complete “verification of risk” tasks in the field, which was a positive engagement and demonstrates Company-wide commitment to this critical business area.

To ensure continuing Company focus in this area, a Safety Reset initiative was completed during Q4 of FY2018, setting a new challenge for the next leg of our safety journey. The challenge was encompassed in the following statement “The standard you walk past is the standard you accept”. We expect that safety performance across our operations will continue to improve as the business continues to grow and mature.

Financial Performance

The Group reported a net profit after tax of $75.6 million, an increase of 166% on the previous year (2017: $28.4 million). This result is inclusive of a non-cash write down of $0.9 million relating to the disposal of the Wallbrook project, the expensing of $1.4 million of exploration costs previously capitalised (refer to note 11), and a gain of $10.6m on the disposal of the King of the Hills project.

Sales revenue for the year was $511.0 million, up 21% from $423.1 million in the previous year. Gold production for the year was 316,453 ounces up 16% from 272,807 ounces in FY2017. Gold sales for the year were 317,675 ounces, up 19% from 266,556 ounces in 2017 and the average gold price realised for the year was $1,606/oz, down 2% from $1,642/oz in 2017.

Gross profit from mining operations for the year was $117.6 million (2017: $51.6 million) after deducting $17.8 million for royalties and $94.3 million in depreciation and amortisation (2017: $14.6 million and $74.7 million respectively).

Net cash flow from operations for the year was $191.4 million (2017: $125.6 million). Capital expenditure on purchases of plant and equipment, mine development and exploration totalled $130.2 million for the year. This was primarily relating to the development of the Thunderbox C Zone and Kailis open pits at TBO and the Karari, Deep South and Whirling Dervish underground mines at CDO (2017: $117.9 million).


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Cash, Debt and Hedging

As at 30 June 2018, Saracen’s total cash and liquid position was $106.7 million (30 June 2017: $43.9 million), comprised of $99.8 million held in cash and 4,300 ounces of gold in transit (approx. $6.9 million). Gold in transit was valued using a price of $1,600/oz. In addition, Saracen holds investments in Red 5 Limited (ASX: RED), Nexus Minerals Limited (ASX: NXM) and Matsa Resources Limited (ASX: MAT) which were valued at $11.7 million as at 30 June 2018.

The Company maintains a long term senior corporate financing facility. The facility includes an initial $45 million loan facility, $5 million bank guarantee facility and a gold hedging facility. The facility is for a term of three years (to November 2019) and features an “evergreen” arrangement with an annual review date whereby the term can be extended.

The Facility also features an accordion provision under which Saracen can request up to an additional $105 million capacity under the corporate loan (to take the total loan to $150 million) with the approval of the syndicate members.

As at 30 June 2018, the facility had not been drawn down on.

At 30 June 2018, the Group had in place a total gold hedging program comprising of 275,600oz (2017: 235,343oz) forward sales contracts at an average price of $1,730/oz (2017: $1,573/oz) compared to the 30 June 2018 gold spot price of $1,691/oz. These ounces are scheduled to be delivered over the period from July 2018 to March 2021.

Production & Operational Outlook for FY2019 and Beyond


In FY2019, gold production will be principally sourced from the Karari, Deep South and Whirling Dervish underground mines with the balance coming from third party ore purchase agreements and various ore stockpiles.

Production guidance at CDO for FY2019 is 190,000 to 200,000ozs.

Saracen’s business plan for CDO over the next 2 years comprises:

• Delivery aligned to meet or exceed the 7 year production outlook,

• Increase production from Karari underground mine to 1.5Mtpa,

• Commence using cemented paste fill at Karari towards the end of FY2019, increasing overall resource extraction to above 90%,

• Continue growing the Karari resource along strike and at depth,

• Maintain steady state production from the Deep South underground mine (450,000tpa) while exploring the resource at depth and considering future options for this operation,

• Following successful resource drilling of the Whirling Dervish resource, commence full mine development and ramp up to steady state production at Whirling Dervish (700,000tpa),

• Continue growing the Whirling Dervish resource along strike and at depth,

• Maintain a disciplined approach to project execution – start when we need to, aim for projects to be self-funded, ensure the site remains cash flow positive at all times,

• Commence a major exploration program throughout the “Corridor of Riches” and near mine extensions,

• Grow the current gold reserve base,

• Continue working on the strategy of base load feed from Carosue Dam Underground Mines (Karari and Whirling Dervish) with bolt on ‘growth options’ to increase production,

• Optimising production through the Carosue Dam processing plant to increase overall gold production, including investigating grade optimisation opportunities and overall production throughput options,

• Continue the trajectory of reduced All In Sustaining Costs, and

• Generate sustaining cash flows.


In FY2019, gold production will be principally sourced from the C Zone of the Thunderbox open pit and Kailis Stage 2 open pit. Some production will be sourced from the developing Thunderbox underground mine and various stockpiles.

Production guidance at TBO for FY2019 is 135,000 to 145,000ozs.


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Saracen’s business plan for TBO over the next 2 years comprises:

• Delivery aligned to meet or exceed the 7 year production outlook,

• Maintain base load production from Thunderbox open pits while exploring opportunities for high grade satellite top up feed,

• Continue mining Kailis Stage 2 satellite pit to provide high grade ore feed to optimise ore blending opportunities at the Thunderbox mill,

• Continue developing the Thunderbox underground mine, commence underground resource drilling, and assess various full scale options for this potentially long life mine,

• Continue working on Life of Mine strategy of base load feed from various sources adjacent to the TBO mill with bolt on ‘growth options’ to increase production,

• Pursue the optimal operation of the Thunderbox mill to maximise cash flow generation,

• Funding all project development through internal cash flow generation,

• Commence major exploration focus on near mine extensions – the best spot to find a new mine is at an existing mine,

• Grow the current gold reserve base,

• Continue the trajectory of reduced All In Sustaining Costs, and

• Generate sustaining cash flows.

Exploration

During FY2018, Saracen continued to focus on organic growth opportunities proximal to existing resources and operating mines. A significant investment in underground drilling was a key priority aimed at delivering further growth in the Ore Reserves and subsequent mine life. A total of 118,413m of underground diamond core was drilled at Carosue Dam. This drilling was spread across the Karari, Whirling Dervish and Deep South operations.

Underground drilling at Whirling Dervish commenced in the first half of FY2018. The large underground diamond drill program consisting of 43,223m was initially focused on the close spaced infill drilling across the upper levels proximal to the portal location. In the second half of the year a number of deeper resource extension and exploration holes were drilled. The drilling has providing valuable local scale data and has also demonstrated that the mineralised system remains open.

Drilling at Karari was accelerated in the second half of FY2018, following the completion of a new diamond drill platform at the 1940 Level. This drill platform provides the next vantage point in the north side of the mine that will continue to facilitate growth and extension of the resource from this location. Drilling the southern extensions will commence early in FY2019, as the 1916 Level drill platform is completed.

Surface drilling was focused across the Thunderbox region, with resource definition programs undertaken at Thunderbox D Zone, Kailis and Otto Bore. These programs were largely resource infill in nature, confirming the geological interpretation and validating inherited historical datasets. These programs were highly successful and will warrant additional follow up drilling during FY2019.

Regionally, a number of high-resolution gravity surveys were conducted across key prospective areas. These included the Bannockburn district and the Carosue Dam mine corridor. The results from these surveys have significantly improved the local scale targeting through increased resolution of the interpreted geology. Drilling of these key targets has commenced and will continue through into FY2019.

The Butcher Well JV project with AngloGold Ashanti Australia (ASX:AGG) has also been advanced during FY2018, with AngloGold completing a number of programs across the Butcher Well and Lake Carey projects. Highlights included a new discovery at Old Camp, which will continue to be a focus of ongoing work for FY2019.

Investor Relations

During the year the Company presented at several conferences and conducted roadshows to existing and prospective investors, analysts and stockbrokers. These included:

• Diggers and Dealers Conference, Kalgoorlie, August 2017,

• Denver Gold Conference, September 2017,

• Macquarie Bank WA Resources Forum, October 2017,

• RBC Sydney Mining Day, February 2018,


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• BMO Global Metals and Mining Conference, February 2018,

• Euroz Conference, March 2018,

• Macquarie Bank Australia Conference, May 2018,

• Various investor mine site visits to CDO and TBO, and

• Various presentations to brokers and investors in the Eastern States.

Each presentation is released to the ASX and available on both the ASX (www.asx.com.au) and the Saracen website (www.saracen.com.au).

Human Resources

In FY2018, Saracen continued to grow its Human Resources (“HR”) focus building on the solid foundation set in past years. Marianne Dravnieks was appointed as the General Manager People, Culture and Communication in the first quarter of 2018 and her remit includes further developing the Saracen Key Talent and Succession Plans, ensuring that Saracen maintains and grows the culture that will enable future success as well as supporting the ongoing development and growth of the HR and Community functions.

As at 30 June 2018, the business had 383 employees following continued growth to support our operations. The Company continues to promote a workplace culture that embraces diversity, and our submission to the Workplace Gender Quality Agency (“WGEA”) in May 2018 recorded an increasing female participation rate of 15.6%, a 13% increase from the 2017 WGEA submission and exceeding the targets set last year. This positive trend has continued and as at 30 June 2018, Saracen had a female participation rate of 16.45% in comparison to the industry average of 15.90%.

Through FY19, there will be continued focus on maintaining the gains made in female participation as well as extending our diversity focus to include measurement of other diversity elements including Aboriginal and Torres Strait Islanders and regional employment.

The Company is committed to further improving female participation rates across the Group in line with fair recruitment practices. We will continue to include suitable ready now female candidates in recruiting pools as opportunities arise. Further, the Saracen executive team will continue to provide leadership in the area of diversity including growing our female participation at all levels of the organisation. Saracen supports the Women in Mining Association Western Australia (“WIMWA”) and encourages its entire staff, both male and female, to be active participants at events sponsored by WIMWA.

During FY2018, the Saracen Core Values of Attitude, Communication, Courage and Delivery, continued to define and guide our actions and interactions. Supporting our strong, results-driven, “can do” culture, where our people are at the heart of our success a “Think and Act Like Owners” programme was rolled out to encourage our employees to engage with the ongoing and long term success of Saracen. This included the introduction of a Company-wide Employee Share Plan offering all Saracen employees, the opportunity to be “Owners” of the Company.

As part of our ongoing review of our suite of Corporate Policies, all of Saracen’s human resources policies have been updated including equal employment, violence, harassment and bullying and flexible work.

Our focus on training and development has been enhanced this year:

• The Saracen apprenticeship programme has continued with the apprentices moving through the programme and rotations across our sites.

• Development of a Graduate programme that will be implemented fully in FY2019.

• Implementation of a leadership training programme to enhance the skills and capability of our leaders.

For FY2019 Saracen will continue down the path of further improving our people focus, including the implementation of a number of initiatives:

• Continue to seek to align or exceed the mining industry average for female participation in the workforce subject to availability and suitability of candidates.

• Implement measures to understand how many of our people identify as Aboriginal and Torres Strait Islanders.

• Implementation of the Graduate programme and traineeship programmes.

Community Support

Saracen, through its investment in our local communities and our industry, wishes to leave a lasting positive legacy of improved outcomes for all parties. Saracen views engagement, communication and consultation with stakeholders as crucial for business success, including maintaining a social license to operate. Saracen is committed to improving its community engagement through open and transparent dialogue with government representatives, pastoral and community representatives and other key stakeholders.


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The Company’s Core Values of Attitude, Communication, Courage and Delivery, define and guide our interactions with all our stakeholders. The Risk and Sustainability Board Committee was updated during FY2018, with community consultation and engagement being introduced as additional key pillars of the Committee’s remit. During FY2018, Saracen implemented a Community Policy and allocated a number of staff to support the growth of our community engagement and commitment. As part of developing the Community Policy, we have agreed the level of funding we will support and established management processes for allocation of funds at both a site and corporate level.

Prior to FY2018, Saracen had formed several strong relationships with local communities and pastoralists close to our operations - this engagement with our surrounding communities has been further expanded upon this year.

Two significant new sponsorships where Saracen has taken a leading role are:

1. Shooting Stars - an opportunity was presented to Saracen to support Shooting Stars in Leonora. Shooting Stars is an educational programme that partners with Netball WA to use netball and other tools to increase school attendance rates for young Aboriginal and Torres Strait Islander girls living in WA’s remote communities and regional towns.

Saracen has agreed to fund the initial start-up of the Leonora Shooting Stars site and we are working with Shooting Stars to secure ongoing funding from private and public sources. We took this as an opportunity to make a difference in one of the key communities we work in and we are excited about the ongoing partnership with Shooting Stars.

2. Heart of Gold Trail - Saracen is a major sponsor of the Kalgoorlie and Perth Heart of Gold Trails and the associated schools programme. This interactive self-guided virtual trail provides an opportunity to understand gold mining in WA from the early days to the present, increasing the community’s knowledge of its contribution and importance to our society. As a proud member of the WA gold mining community we were very pleased to support this innovative programme.

In addition to these major sponsorships, Saracen has continued its involvement and commitment to a broad range of community groups and organisations during FY2018. This year Saracen has also provided funding and other support to:

• Clontarf Foundation,

• WA School of Mines Graduates Association,

• Perth Special Needs Children’s Christmas Parties,

• Curtin University,

• Leonora Golden Gift,

• Leinster Art Programme,

• Goolarri Goldfields Girls, and

• Leinster Cup.

DIVIDENDS

No dividends have been paid or declared by the Group since the end of the previous financial year.

No dividend is recommended in respect of the current financial year.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the financial year there were no significant changes in the state of affairs of the Group other than that referred to in the financial statements or notes thereto.

MATTERS SUBSEQUENT TO THE REPORTING PERIOD

On 21 August 2018, Saracen entered into a contract with GR Engineering Services Limited for the engineering design, procurement and construction of a paste backfill plant at the Carosue Dam operations for an estimated contract value of $17.9m.

No other material events have occurred since 30 June 2018 requiring disclosure.

Except for the event detailed above, no other matter or circumstance has arisen since 30 June 2018 that has significant affected, or may significantly affect:

• The Group’s operation in future financial years, or

• The result of those operations in future financial years, or

• The Group’s state of affairs in future financial years.


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LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

The Company continues to seek suitable mineral opportunities for acquisition or farm-in, as well as corporate investments, while operating and expanding the Company’s operations. Refer to the Production and Operational Outlook for FY2019 and beyond on pages 47 to 48.

ENVIRONMENTAL REGULATION AND PERFORMANCE

Saracen recognises that respecting the environmental values held by people both within and outside of the Company is an integral part of doing business.

Saracen is committed to conducting operations in an environmentally sensitive manner. Through the implementation of a Company-wide Environmental Management System (“EMS”), Saracen is able to continually minimise any adverse environmental risks that may be associated with its business activities. The Saracen Group is subject to environmental regulations associated with the granting of licences by various regulatory bodies, including the Department of Mines Industry Regulation and Safety (“DMIRS”), Department of Water and Environmental Regulation (“DWER”), and the Department of Planning, Lands and Heritage (“DPLH”). The Group continues to operate in compliance with these regulations.

Inspection and monitoring of vegetation, groundwater and emissions are conducted to ensure compliance and provide evidence of compliance in accordance with the above mentioned licences. Results are reported in various annual reports to regulatory bodies in accordance with statutory requirements. There were no significant non-compliances during the year.

The Group is also subject to reporting requirements of the National Environmental Protection (National Pollution Inventory) Measure 1998 (“NPI”) and the National Greenhouse and Energy Reporting Act 2007 (“NGER”). This legislation requires the Group to report its annual greenhouse gas emissions and energy use. Systems and processes have been implemented for the collection and calculation of the data required for both of these reports submitted in September 2017 and October 2017 respectively.

Key environmental achievements during FY2018 included:

• Completion of a rehabilitation performance assessment report for the Serengeti and Safari Waste Rock Landforms (Mt Celia Project). The landforms have successfully achieved compliance with closure completion criteria commitments, therefore Saracen have applied for “sign off” of the infrastructure under the requirements of the Mining Rehabilitation Fund (“MRF”).

• Submission and attainment of all key environmental approvals for 10 years of operations at the Carosue Dam Project. All major infrastructure requirements in the current CDO Life of Mine Plan have been fully approved through the required regulatory bodies.

• Completion of a 10 year Water Supply strategy for CDO. This strategy includes the findings of an airborne Time Delay Electromagnetic survey completed at Carosue Dam and Deep South in December 2017. Importantly, the findings from this survey will enable Saracen to more accurately and efficiently target groundwater resources through future drilling campaigns.

• The Company progressed planning for a semi–integrated landform/Tailings Storage Facility (“TSF”) design of the Thunderbox Eastern Waste Rock Dump and TSF to minimise disturbance.

• The Company finalised the updated Risk Assessment on the inherited legacy contamination caused by windblown dust from TSF Cells A & B at Thunderbox. This assessment demonstrated that the risk to human health and the environment from dust outside the TSF within vegetated areas immediately adjacent to the TSF, is low and can be managed through normal site practices. The Company will continue to monitor dust deposits in line with the approved Site Management Plan to ensure that the risk remains low and continues to be managed.

• Construction and development of a new palaeochannel borefield at Bannockburn to deliver 10 years of sustainable process water supply for the Thunderbox operations.


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DIRECTORS’ MEETINGS

The number of Board and Committee meetings held, and the number of those meetings attended by each Director or Committee member during the financial year were:

director Board Audit committee Remuneration and Risk Management & exploration & Growth Meetings Meetings nomination Sustainability committee committee Meetings committee Meetings Meetings

Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings held while attended held while attended held while attended held while attended held while attended a director a member a member a member a member

Geoff Clifford 10 10 2 2 1 1 - - 2 2

Raleigh Finlayson 10 10 - - - - 4 4 2 2

Mark Connelly 4 4 1 1 1 1 - - - -

Martin Reed 10 10 1 1 1 1 4 4 2 2

Roric Smith 10 10 - - 1 1 4 4 2 2

Samantha Tough 10 10 2 2 2 2 - - 2 2

In addition to the scheduled Board and Committee meetings, Directors regularly communicate by telephone, email or other means, and where necessary, circular resolutions are executed to effect decisions.


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REMUNERATION REPORT (AUDITED)

The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001.

The Directors present the Saracen Mineral Holdings Limited 2018 Remuneration Report, outlining key aspects of our remuneration policy and framework, and remuneration awarded this year. This report forms part of the Directors’ Report.

The report is structured as follows:

1. Key management personnel (“KMP”) covered in this report

2. Key changes since the 2017 Remuneration Report

3. Remuneration governance

4. Remuneration philosophy

5. Executive remuneration policy and framework

6. Link between remuneration and performance

7. Details of remuneration

8. Contractual arrangements with executive KMP

9. Non-executive director arrangements

10. Additional statutory information

1. Key Management Personnel covered in this Report

The Directors of the Group during the financial year were:

Geoffrey Clifford Non-Executive Chairman

Raleigh Finlayson Managing Director (Executive)

Mark Connelly Non-Executive Director (resigned effective 23 November 2017)

Martin Reed Non-Executive Director

Roric Smith Non-Executive Director (appointed 4 July 2017)

Samantha Tough Non-Executive Director

The KMP during were:

Morgan Ball Chief Financial Officer

Simon Jessop Chief Operating Officer (appointed 11 December 2017)

Daniel Howe Chief Geologist

William (Troy) Irvin Corporate Development Officer

Marianne Dravnieks General Manager - People, Culture and Communication (appointed 6 March 2018)

2. Key changes since the 2017 Remuneration Report

2A. changes to Board of directors

As highlighted in the 2017 Remuneration Report, Dr Roric Smith was appointed to the Saracen Board on 4 July 2017 and Mr Mark Connelly stepped down from the Saracen Board following the Company’s 2017 AGM on 23 November 2017.

2B. Appointment of KMp

Mr Simon Jessop was appointed as Saracen’s Chief Operating Officer on 11 December 2017. Mr Jessop brings a wealth of industry and operational experience to Saracen’s management team most recently as General Manager Underground Operations at Evolution Mining.

Ms Marianne Dravnieks was appointed as General Manager - People, Culture and Communications on 6 March 2018. Ms Dravnieks brings a depth of resources and people management experience, most recently through her own strategic HR consulting business working with a number of ASX listed companies.


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2c. Approval of performance Rights issued to the Managing director

The issue of 660,000 performance rights to Raleigh Finlayson was approved by shareholders at the Annual General Meeting held on 23 November 2017. Refer to “5 - Executive Remuneration Policy and Framework” below for further details.

2d. issue of performance Rights to KMp

During the year, 5,030,700 performance rights were granted to Saracen employees. Of this total, 1,900,000 were allocated to KMP. Refer to “5 - Executive Remuneration Policy and Framework” below for further details.

3. Remuneration Governance

3A. Remuneration decision making

The Remuneration & Nomination Committee (“RNC”) is a sub-committee of the Board. It is primarily responsible for making recommendations to the Board on:

(i) the over-arching executive remuneration framework,

(ii) operation of the incentive plans which apply to executive directors and senior executives including key performance indicators and performance hurdles,

(iii) remuneration levels of executives, and

(iv) Non-Executive Director Fees.

The Committee reviews and determines the Group’s remuneration policy and structure annually to ensure it remains aligned to business needs, meets the Group’s remuneration principles and is reflective of generally acceptable market practices. From time to time, the Committee also engages external remuneration consultants to assist with this review, see “10E – Use of remuneration consultants” below for further information.

In particular, the RNC and Board aims to ensure that Saracen’s remuneration practices are:

• competitive and reasonable, enabling the Company to attract and retain key talent,

• aligned to the Company’s strategic and business objectives and the creation of shareholder value,

• transparent and easily understood, and

• acceptable to shareholders.

The RNC has delegated authority to the Managing Director for approving remuneration recommendations for employees other than KMP, within the parameters of Board approved Group wide remuneration levels, structures and budgets.

The members of the RNC are all independent, Non-Executive Directors and, as at the date of this report, comprised:

• Geoff Clifford – Chair of Committee, Non- Executive Chairman,

• Roric Smith – Non-Executive Director, and

• Samantha Tough – Non-Executive Director.

3B. clawback of remuneration

In the event of serious misconduct or a material misstatement in the Group’s financial statements, the Board has the discretion to reduce, cancel or clawback any unvested short term or long term incentives.

3c. Securities trading policy

The Group’s Securities Trading Policy applies to all employees including Directors and KMP. In accordance with the Policy, employees may only deal in Saracen Mineral Holdings Limited securities in the period of 30 days from the day following:-

• the announcement of half-year results, or

• the announcement of annual results, or

• the announcement of quarterly results, or

• the holding of the Annual General Meeting.

These are collectively referred to as the “Window Period”.

The Policy prohibits employees from dealing in Saracen Mineral Holdings Limited securities while in possession of material non-public information relevant to the Group, even if it is within a Window Period.

Directors of the Group are prohibited from dealing in securities of Saracen Mineral Holdings Limited outside of a Window


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Period and must receive written consent from the Chairman or the Board for any dealing in the Group’s securities within a Window Period. Similarly, KMP must receive written consent from the Managing Director or Chairman for any dealing in the Group’s securities within a Window Period.

4. Remuneration Philosophy

The RNC has determined that the Group’s overall remuneration structure may comprise of:

1. Total Fixed Remuneration (“TFR”) – this is generally comprised of base salary plus statutory superannuation,

2. Short Term Incentives (“STIs”) – this is generally reflected as a cash payment that is only received by an eligible employee if specified annual targets are achieved and performance is satisfactory, and

3. Long Term Incentives (“LTIs”) – this generally comprises of Performance Rights with a minimum three year vesting period that are subject to specified performance based vesting conditions (both relative and absolute) set by the Board. This benefit is available to selected employees and may include KMP.

The Group targets remuneration at TFR to be positioned on or around the industry median (the 50th percentile) based primarily on the industry benchmark AON Hewitt McDonald Report (an independent, industry recognised general mining remuneration benchmarking survey that is updated twice each calendar year). From time to time, the RNC accesses other industry benchmark data as required in order to ensure full data is considered. In addition, with Managing Director approval, there is scope for high performers or key talent to be remunerated between the industry 50th and 75th percentile.

Most employees have the opportunity to participate in the Company’s short term incentive plan (“STIP”) which is based upon the Company achieving annual performance metrics (generally based on exceeding budgeted targets, which are both operational and financial in nature, and may also include a personal performance component).

Selected employees may also be invited annually to participate in the Company’s long term incentive plan (“LTIP”) which is based upon the Company achieving certain market, operational and financial performance related metrics both on an absolute basis and relative to a nominated peer group over a minimum three year period.

The overall objectives of the Group’s remuneration strategy are that:

• Total remuneration for each level of the workforce is appropriate and sustainable,

• Short term incentives are subject to appropriate hurdles that are generally measurable and transparent,

• Incentive plans are designed to motivate high performance and delivery of Company objectives,

• Long term incentives are focussed on shareholder value and key talent retention, and

• The principles and integrity of the remuneration review process deliver fair and transparent outcomes.

The philosophy and remuneration levels are reviewed regularly to ensure that the Group remains competitive as an employer.

5. Executive Remuneration Policy and Framework

The RNC is responsible for determining remuneration policies in respect of Executive Directors and KMP. In establishing such policies, the RNC is guided by the Group’s overall remuneration philosophy (set out above), as well as peer assessments, external remuneration surveys and industry practices, commensurate with the scale, size and complexity of the Group’s operations.

executive Remuneration - FY2018

The Remuneration Principles that the Saracen Board has designed in relation to its executive remuneration strategies include:

• Align the interests of shareholders with executive remuneration

- KMP Total Remuneration (“TR”) includes a significant “at risk” component

• Measure and Reward performance relevant to organisation success

- Link Key Performance Indicators (“KPIs”) for executives to key business drivers and long term strategy

• Attract, motivate and retain highest quality KMP

- Align executive TFR with the Group’s stated objective of positioning TFR at the market median (50th percentile) and 75th percentile for Total Variable Remuneration (“TVR”)

This executive remuneration framework that was updated during FY2017 has remained unchanged in FY2018 and no changes are proposed.


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A key tenet of the framework implemented in FY2017 was to ensure that the majority of KMP salary is “at risk“, in order to ensure KMP interests are aligned with shareholders. As illustrated below, if paid at full value, the “at risk” component comprises 60% of TR.

DIRECTORS’ RepoRt (continued)

executive Remuneration Framework FY2018

The Executive Remuneration framework in place for KMP for FY2018 has three components as per the table below:

KMP Remuneration

Short Term Incentive

Long Term Incentive

Total Fixed Remuneration

20%

40%

40%

element consist of performance Metrics

Total Fixed Remuneration

Base pay and benefits, including superannuation

Ongoing Performance in Role

Short-Term Incentives Cash payments targeted at a percentage of TFR

As per annual targets set and approved each year

Includes an individual performance component

Board Discretion

Long-Term Incentives Performance Rights based on a percentage of TFR

3 Year Peer Group Total Shareholder Return* comparison

3 Year growth of Ore Reserves

3 Year EPS Growth

Board discretion

* Total Shareholder Return (“TSR”) is calculated as the increase in the price of a Group’s shares on the ASX over and in respect of the performance, based on the 30 day VWAP for those shares, plus any reinvested dividends, expressed as a percentage of the 30 day VWAP share price.

(i) Base pay and benefits

The Group has employment agreements with all KMP. These agreements are capable of termination in accordance with standard employment terms. The terms of the agreements are open ended, although the Group retains the right to terminate an agreement immediately by making a payment equal to the notice period in lieu of that person working out their notice period. KMP are also entitled to receive, on termination of employment, their statutory entitlements of accrued annual and long service leave.

Each employment agreement outlines the components of remuneration paid to each executive but does not prescribe how remuneration levels are modified from year to year. Remuneration levels are reviewed each year. Additional details of KMP employment agreements can be found below at section “8 – Contractual arrangements with executive KMP”.

Other than above, or as disclosed elsewhere in the Remuneration Report, no KMP are subject to specific employment agreements.

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Operating and non-operating KPIs relevant to each KMP are set so as to form a basis of assessment of future levels of remuneration. The KPIs set for KMP are directly aligned to the Group’s business performance, for example, performance against the annual budget, health and safety measures and other operational criteria. The Board retains the right to determine an executive’s remuneration depending on the outcome of the annual performance reviews and other factors that the Directors consider relevant.

A formal annual performance review system is in place whereby KMP performance against individual and corporate KPI’s are reviewed and discussed.

In addition to base salary, superannuation is paid on the base salary at the statutory level. KMP may elect to contribute additional amounts to superannuation subject to legislative limits.

(ii) performance linked remuneration

Performance linked remuneration includes both short term incentives (in the form of cash payments) and long term incentives (in the form of equity instruments – currently Performance Rights) and is designed to reward KMP for meeting or exceeding targets which align with business performance and creating shareholder value both on a relative and absolute basis.

(a) Short term incentives

The STI is an annual “at risk” component of remuneration for KMP. It is payable based on Saracen’s performance against KPIs set at the beginning of the financial year. STIs are structured to remunerate KMP for achieving annual targets on an individual and a group basis which are designed around the success of the business. The STI is payable in cash after allowance for tax deductions and is generally made in the following financial year.

For FY2018, the KPIs set for KMP related to safety, implementation of strategic plan, delivery of guidance relating to production and costs, free cash generation and personal KPIs dependent on a number of qualitative factors. These KPIs were chosen in order to align KMP with measures that increase long term shareholder value through the achievement of annual performance measures.

Refer to the table below for the structure of the STI Plan:

Element Description

Maximum 100% achieved (“Stretch target”) equates to 50% of tFR opportunity

performance Metric Base Target Stretch Target Weighting Actuals Bonus Weighted metrics: Achieved Bonus

ESG Group TRIFR Group TRIFR 20% 32%* 62.5% 6.25% (Environmental, 10% Reduction 20% Reduction Reduction Social and

Governance) Maintain social license to operate Qualitative

Implement Agree and implement Strategy 20% Qualitative 75% 7.5% Strategic Plan Plans with the Board and then deliver specific Business

Deliver Production 300,000oz Production 315,000oz 20% 316,453oz Guidance AISC: $1,150/oz AISC: $1,100/oz $1,139/oz 75% 7.5%

Cash and Liquid $86M $100M 20% $118M 100% 10% Investments

Personal KPIs 20% Qualitative 75% 7.5%

percentage of maximum Sti achieved 38.75%

* Despite exceeding the Stretch Target for Group TRIFR reduction, the Board and KMP reduced the Safety STI component due to a number of Serious Potential Incidents recorded in FY2018

The RNC determined that for FY2018, the Managing Director and other KMP would receive 38.75% as their STI compared to a maximum available of 50%. The STI amounts payable for FY2018 are included in the remuneration calculation in the table under section “7 - Details of Remuneration”. These amounts are expected to be paid in October 2018. Note that Mr Jessop and Ms Dravnieks received prorated amounts reflecting their length of service in FY2018.


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(b) Long term incentives

LTI awards are structured to retain and incentivise KMP and selected employees to achieve business objectives and are aligned with shareholder interests for the long term performance of the Group on an absolute basis and relative to peers. These are currently granted in the form of 3 Year Performance Rights in line with the shareholder approved Long Term Incentive Plan (LTIP). Details of existing (issued during FY2017 & FY2018) and proposed (to be issued during FY2019) LTI performance measures are set out below.

FY2019 Executive Remuneration

As noted, each year the Board considers Executive remuneration for the upcoming financial year based on Saracen’s Remuneration Policy and framework and also against independent remuneration data and peer analysis.

Further to this, Saracen’s Executive remuneration principles for FY2019 are confirmed as follows:

1. Base Salary – maintain target around the 50th percentile.

2. Confirmation that as in FY2018, 60% of Executive Total Remuneration (TR) is to be “at risk”

3. Incentives – maintain target around the 75th percentile:

a. Maximum STI that the Executive can receive to be up to 50% of TFR, and

b. Maximum LTI that the Executive can receive to be up to 100% of TFR.

FY2019 Executive Remuneration: STI Measures

The RNC recommended the following measures to apply to the KMP STI’s for FY2019. For full payment of STIP all stretch targets must be met.

Annual KPIs Measure

Target Stretch

1. HSEC and Sustainability

Safety 10% reduction TRIFR 20% reduction TRIFR

Progress towards strong safety culture Safety interactions occurring across sites

Environment & Community Compliance with regulatory requirements Zero significant environmental breaches Engagement with stakeholders & community

2. Deliver Guidance – AISC Achieve market guidance range Exceed market guidance by at least 10% of $1,050 to $1,100/oz

3. Deliver Guidance – Production Meet annual production guidance Exceed market guidance by at least 10% of 325,000 to 345,000ozs

4. Cash Balance Achieve budgeted free cash flow Exceed budgeted free cash flow generation generation by at least 20%

5. Deliver Strategic Plan Horizon 1: Deliver Strategic Plan FY19 Horizon 1: Exceed Strategic Plan for FY19 Demonstrating progress towards Horizon 2 (Years 2 to 5) & Horizon 3 (Years 5 to 10)

FY2019 Executive Remuneration: LTI Measures

The RNC recommended the following performance measures apply to KMP LTI’s (in the form of Performance Rights) to be awarded during FY2019. An additional measure, absolute share price increase, has been added compared to the FY2018 LTIP measures. F

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* The Peer Group for calculation of the relative TSR performance is as follows:

Newcrest (ASX: NCM) Evolution (ASX: EVN)

Northern Star (ASX: NST) Regis (ASX: RRL)

St Barbara (ASX: SBM) Oceana (ASX:OGC)

Ramelius (ASX: RMS) Westgold (ASX: WGX)

Silver Lake (ASX: SLR) Millennium (ASX: MOY)

Dacian (ASX: DCN) Doray (ASX: DRM)

Pantoro (ASX: PNR) Blackham (ASX: BLK)

performance Rights

The Saracen Mineral Holdings Limited Performance Rights Plan (“Plan”) was approved at the November 2017 AGM. The Plan provides the Board with the discretion to grant Performance Rights to eligible participants that will vest subject to the achievement of performance measures or KPIs as determined by the Board from time to time.

The objective of the Plan is to attract, motivate and retain KMPs and it is considered by the Group that the Plan and the future issue of Performance Rights under the Plan will provide selected participants with the opportunity to participate in the future growth of the Group. The Plan will enable the Group to make grants to selected employees so that long term incentives form a key component of their total annual remuneration.

The Board believes that grants under the Plan will serve a number of purposes including:

• to act as a key retention tool, and

• to focus attention on future shareholder value generation.

Under the Plan, selected employees will be granted Performance Rights. Vesting of any of these Performance Rights will be subject to the achievement of a number of KPIs which can be varied each year.

Each Performance Right represents a right to be issued one share at a future point in time, subject to the satisfaction of any vesting conditions. No exercise price is payable. The quantum of Performance Rights to be granted will be determined with reference to market practice and will be subject to approval by the Board.

Ltip Measures Splitperformance Rights (measured over a 3 year performance period)

Measure

Relative TSR 25% Below 50th % - Nil vest

At 50th % - 50% vest

50th to 75th % - pro rata between 50% and 100% vest

75th % and above – 100% vest

Measured against Peer Group* based on 30 day VWAP at the relative measure points

Increase in Ore Reserves

25% Negative – Nil vest

Depletion replacement – 50% vest

Depletion replacement to 25% increase – pro rata between 50% and 100% vest

25% increase or greater – 100% vest

Annual FY JORC compliant Reserves & Resource Statement

EPS Growth 25% Negative – Nil vest

5% pa growth – 50% vest

5 to 10% pa growth – pro rata between 50% and 100% vest

10% pa or greater growth – 100% vest

EPS calculation to exclude non-recurring items and measured as the cumulative annual growth rate over a 3 year period

Increase in Share Price

25% Below 25% - 0%

Between 25% & 50% - pro rata between 50% and 75%

More than 50% - 100%

Measure by comparing 30 day VWAP at 30 June 2018 to 30 day VWAP at 30 June 2021

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Performance will be assessed at the end of the performance period which is to be a minimum of three years in duration.

Any grants under the Plan will be subject to the achievement of KPIs. Appropriate KPIs are formulated to align each Eligible Participant with the interests of the Company’s shareholders.

Performance Rights will lapse if the participant leaves the Group prior to all the vesting conditions being fulfilled although the Board has the ability, at its sole discretion, to vest some or all the Rights if “good leaver” exemptions apply to the ceasing of employment. Persons who are terminated for “bad leaver” reasons automatically lose their entitlement.

Each year the Company issues Performance Rights in Tranches. Details in relation to the relevant Performance Rights Tranches issued to the Managing Director and KMP are below.

The KPIs for Tranches 3, 4, and 6 to 11 that have been issued are below. Note that Tranches 3 and 4 have now vested based on the relevant performance metrics and been converted to shares prior to 30 June 2018. Note also that Tranches 6 and 9, based on the relevant performance metrics vested post 30 June 2018 and have been converted to shares during the year ending 30 June 2019 (details included below).

Class A Class B Class C

performance comparison of the company’s total increase in ore reserves. increase in the share price. condition Shareholder Return (tSR) with that of a group of peer companies.

Vesting percentile proportion of increase in proportion of Share price proportion of condition rights vesting ore reserves rights vesting increase rights vesting

Below 50th percentile 0% Between 0% 50% Below 25% 0% and 25%

Between 50th and Between 50% and More than 25% 100% Between 25% Between 50% 75th percentile 100% on a straight and 50% and 75% line basis

Above 75th percentile 100% More than 50% 100%

The KPIs for Tranche 5, issued to the Managing Director and approved by the shareholders at the Annual General Meeting held on 25 November 2015 are set out below. Note that Tranche 5 has now vested based on the achievement of the relevant performance metrics and been converted to shares prior to 30 June 2018:


performance First gold production at comparison of the company’s total comparison of the company’s total condition the thunderbox operations Shareholder Return (tSR) with that Shareholder Return (tSR) with that of by 31 december 2016. of a group of peer companies (2 years). a group of peer companies (3 years).

Vesting thunderbox goes proportion of percentile proportion of percentile proportion of condition into production rights vesting rights vesting rights vesting

No 0% Below 50th 0% Below 50th 0% percentile percentile

Yes 100% Above 50th 100% Above 50th 100% percentile percentile

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The KPIs for Tranches 12 and 13 that have been issued are set out below:


performance comparison of the company’s total increase in ore reserves. increase in the earnings per share. condition Shareholder Return (tSR) with that of a group of peer companies.

Vesting percentile proportion of increase in proportion of earnings per proportion of condition rights vesting ore reserves rights vesting share increase rights vesting

Below 50th 0% Between 0% Between 50% and Between 5% Between 50% percentile and 25% 100% on a pro and 10% and 100% on a percentile rata basis pro rata basis

Between 50th and Between 50% More than 25% 100% More than 10% 100% 75th percentile and 100% on a pro rata basis

Above 75th percentile 100%

As at 30 June 2018, tranches 6, 7, 8, 9 and 10 to 13 remain unvested as the relevant performance period is continuing.

For the comparison of the Total Shareholder Return (TSR) metric for the Class A Performance Rights, the Board agrees on an appropriate peer group each year. This peer group is assessed for its relevance to Saracen each year and may also be adjusted to make allowance for changes in the circumstances of any of those companies or any new company determined to enter into a peer ranking position.

Summary of FY2015 performance Rights (tranche 3 – Managing director)

Issue Date and Price: 26 November 2014 - 27.5 cents

Performance Period: 1 July 2014 to 30 June 2017

Vesting Date: 1 July 2017

Fair Value per Right: • Class A – 19.3 cents

• Class B – 27.5 cents

• Class C – 17.3 cents

An allocation of 735,000 Rights were granted to the Managing Director, Raleigh Finlayson following shareholder approval at the Annual General Meeting in November 2014.

A Monte Carlo simulation was undertaken on these Rights to determine the probability of the market conditions associated with the Rights being met. The probability estimates were then applied to ascertain an estimated fair value for the Rights. This value was estimated, for accounting purposes, to be $148,029. 100% of these rights vested during FY2018.

Summary of FY2015 performance Rights (tranche 4 - KMp)

Issue Date and Price: 1 April 2015 - 41 cents






An allocation of 760,000 Rights were granted to KMP on 1 April 2015.

A Monte Carlo simulation was undertaken on these Rights to determine the probability of the market conditions associated with the Rights being met. The probability estimates were then applied to ascertain an estimated fair value for the Rights. This value relating to KMP was estimated, for accounting purposes, to be $241,984. 30% of these rights (relating to KMP) vested during FY2017 with an additional 39% vesting in FY2018. The remaining rights did not vest in line with the conditions in the performance rights plan.


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Issue Date and Price: 21 May 2015 - 53.5 cents

Performance Period: • Class A – N/A

• Class B – 16 March 2015 to 16 March 2017

• Class C – 16 March 2015 to 16 March 2018

Vesting Date: • Class A – 1 January 2017

• Class B – 17 March 2017

• Class C – 17 March 2018




An allocation of 10,000,000 Rights were granted to the Managing Director, Raleigh Finlayson following shareholder approval at the Annual General Meeting in November 2015.

A Monte Carlo simulation was undertaken on these Rights to determine the probability of the market conditions associated with the Rights being met. The probability estimates were then applied to ascertain an estimated fair value for the Rights. This value was estimated, for accounting purposes, to be $4,693,000. 100% of the Class A and Class B rights vested during FY2017 and 100% of the Class C rights vested during FY2018.


Issue Date and Price: 18 December 2015 - 57 cents






An allocation of 800,000 Rights were granted to KMP on 18 December 2015.

A Monte Carlo simulation was undertaken on these Rights to determine the probability of the market conditions associated with the Rights being met. The probability estimates were then applied to ascertain an estimated fair value for the Rights. This value relating to KMP was estimated, for accounting purposes, to be $354,240.


Issue Date and Price: 31 August 2016 - 132 cents



Fair Value per Right: • Class A – 74 cents

• Class B – 132 cents


An allocation of 255,000 Rights were granted to KMP on 31 August 2016.

A Monte Carlo simulation was undertaken on these Rights to determine the probability of the market conditions associated with the Rights being met. The probability estimates were then applied to ascertain an estimated fair value for the Rights. This value relating to KMP was estimated, for accounting purposes, to be $225,930.








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A Monte Carlo simulation was undertaken on these Rights to determine the probability of the market conditions associated with the Rights being met. The probability estimates were then applied to ascertain an estimated fair value for the Rights. This value was estimated, for accounting purposes, to be $97,199.

Summary of FY2017 performance Rights (tranche 9 – cFo)

Issue Date and Price: 18 January 2017 - 116.5 cents






On 18 January 2017, an allocation of 100,000 Rights were granted to the Company’s newly appointed CFO, Mr Morgan Ball, in relation to the period 1 July 2015 to 30 June 2018 as part of his initial employment.


Summary of FY2017 performance Rights (tranche 10 – cFo)

Issue Date and Price: 18 January 2017 - 116.5 cents

Performance Period 1 July 2016 to 30 June 2019





On 18 January 2017, an allocation of 200,000 Rights were granted to the Company’s newly appointed CFO, Mr Morgan Ball, in relation to the period 1 July 2016 to 30 June 2019 as part of his initial employment.


Summary of FY2018 performance Rights (tranche 11 – coo)

Issue Date and Price: 15 December 2017 - 158.0 cents






On 15 December 2017, an allocation of 450,000 Rights were granted to the Company’s newly appointed COO, Mr Simon Jessop, in relation to the period 1 July 2016 to 30 June 2019 as part of his initial employment.



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Summary of FY2018 performance Rights (tranche 13 – KMp)

Issue Date and Price: 15 December 2017 - 158.0 cents






An allocation of 1,450,000 Rights were granted to KMP on 15 December 2017.

A Monte Carlo simulation was undertaken on these Rights to determine the probability of the market conditions associated with the Rights being met. The probability estimates were then applied to ascertain an estimated fair value for the Rights. This value relating to KMP was estimated, for accounting purposes, to be $1,944,450.

Refer to “10B - Details of share based compensation” for a detailed breakdown of performance rights issued to each KMP.

6. Link between Remuneration and Performance

The Group aims to align its executive remuneration to its strategic and business objectives and the creation of shareholder wealth. The table and graphs below show the measures of the Group’s financial performance over the last five (5) years as required by the Corporations Act 2001. Note that these are not necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to KMP - refer to “5 - Executive Remuneration Policy and Framework” above for actual measures used. As a consequence, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration awarded.

2014 2015 2016 2017 2018

Sales Revenue ($’000) 211,424 249,872 276,502 423,058 510,961

Profit/(loss) after income tax ($’000) 5,995 11,148 25,889 28,386 75,585

Basic EPS (cents per share) 0.91 1.41 3.26 3.52 9.29

Share price ($) 0.41 0.43 1.44 1.17 2.19

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In relation to the most recent Performance Period assessed - 1 July 2015 to 30 June 2018 (Performance Rights Tranches 6 & 9):

• The TSR of the Company has been independently calculated to be 382% placing it at the 81st percentile of the identified Peer Group. Therefore, as stipulated for the vesting of Tranche 6 & Tranche 9 Class A Performance Rights, 100% vesting of the Rights was achieved and shares were issued to eligible recipients in Q1FY2019.

• The ore reserves of the Company increased by 68.5% over the period. Therefore, as stipulated for the vesting of Tranche 6 & Tranche 9 Class B Performance Rights, 100% vesting of the Rights was achieved and shares were issued to eligible recipients in Q1FY2019.

• The share price of the Company has been calculated to have increased 409% over the period. Therefore, as stipulated for the vesting of Tranche 6 & Tranche 9 Class C Performance Rights, 100% vesting of the Rights was achieved and shares were issued to eligible recipients in Q1FY2019.


2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

Sales Revenue ($’000)80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

600,000

500,000

400,000

300,000

200,000

100,000

0

109876543210

Profit/(loss) after tax ($’000)

Basic EPS (cents per share)

2,000

1,500

1,000

500

0

2.5

2

1.5

1

0.5

0

Gol

d P

rice

(A$/

oz)

Shar

e P

rice

Share price ($)

Share price Gold price at 30 June

2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

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7. Details of Remuneration

Details of the nature and amount of each major element of the remuneration of each Director of the Group and each of the KMP of the Group during the financial year are:

30 June 2018 Short-term post Share Long total proportion employee Benefits employ- Based term of total ment payments Benefits performance related

Salary cash other Super- performance Long & fees bonus (iv) benefits (i) annuation Rights Service and other Leave (iv) $ $ $ $ $ $ $

Directors

G Clifford 155,251 - - 14,749 - - 170,000 -

R Finlayson (ii)(v) 716,406 285,757 6,407 25,000 818,315 8,436 1,860,321 59.3%

M Connelly 43,531 - - 4,135 - - 47,666 - (resigned effective 23 November 2017)

M Reed(iii) 120,000 - - - - - 120,000 -

R Smith 109,589 - - 10,411 - - 120,000 - (appointed 4 July 2017)

S Tough 109,589 - - 10,411 - - 120,000 -

Key Management Personnel

M Ball(ii)(v) 416,790 169,338 9,868 18,928 230,469 1,620 847,013 47.2%

M Dravnieks 87,970 58,210 - 8,357 - - 154,537 37.7% (appointed 6 March 2018)

D Howe(ii) 300,000 127,003 6,111 31,243 152,265 10,818 627,440 44.5%

W T Irvin(ii) 300,000 127,003 - 31,243 152,265 1,962 612,473 45.6%

S Jessop(ii) 250,404 106,683 - 23,788 300,859 1,159 682,893 59.7% (appointed 11 December 2017)

Total 2,609,530 873,994 22,386 178,265 1,654,173 23,995 5,362,343

(i) Other benefits include Group provided health insurance and car parking. (ii) Share based payments are the performance rights which are expensed over the vesting period (refer to note 18 in the consolidated

financial statements). (iii) Martin Reed’s Directors Fees of $120,000 are paid/payable to PilotHole Pty Ltd, an entity controlled by Mr Reed.(iv) These amounts are accounting accruals and have not actually been paid during the year.(v) Employee has reached the maximum super contribution base. The amount of deemed superannuation in excess of the maximum

contribution base was paid out as a salary at the employees election.


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30 June 2017 Short-term post Share Long total proportion employee Benefits employ- Based term of total ment payments Benefits performance related

Salary cash other Super- performance Long & fees bonus (iv) benefits (i) annuation Rights Service and other Leave (iv) $ $ $ $ $ $ $

Directors

G Clifford 143,836 - - 13,664 - - 157,500 -

R Finlayson(ii)(v) 743,724 96,250 5,773 30,000 1,800,988 13,397 2,690,132 70.5%

M Connelly 98,173 - - 9,327 - - 107,500 -

M Reed – Director Fees(iii) 107,500 - - - - - 107,500 -

M Reed – Consulting Fees(vi) 8,768 - - - - - 8,768 -

S Tough 98,173 - - 9,327 - - 107,500 -


M Ball(ii) 213,600 19,777 4,766 13,790 54,673 966 307,572 24.2% (appointed 12 December 2016)

C Bradshaw 313,759 - 65,000 23,704 - - 402,463 - (resigned 13 April 2017)

G Kaczmarek(ii) 178,707 - 368,034 16,625 102,234 - 665,600 15.4% (resigned 31 December 2016)

D Howe(ii) 297,917 28,875 5,704 31,256 81,050 13,678 458,480 24.0%

W T Irvin(ii) 297,917 28,875 - 31,256 75,390 1,255 434,693 24.0%

Total 2,502,074 173,777 449,277 178,949 2,114,335 29,296 5,447,708

(i) Other benefits include Group provided health insurance, car parking and termination payments. (ii) Share based payments are the performance rights which are expensed over the vesting period (refer to note 18 in the consolidated

financial statements). (iii) Martin Reed’s Directors Fees of $107,500 are paid/payable to PilotHole Pty Ltd, an entity controlled by Mr Reed.(iv) These amounts are accounting accruals and have not actually been paid during the year.(v) Employee has reached the maximum super contribution base. The amount of deemed superannuation in excess of the maximum

contribution base was paid out as a salary at the employees election.(vi) An amount of $8,768 has been paid to PilotHole Pty Ltd relating to professional service provided by Martin Reed in relation to a due

diligence project. The Board considered that these services were in the best interests of the shareholders for this specific circumstance and considering the limited nature of the work required.

8. Contractual Arrangements with Executive KMP - FY2018

Remuneration of the Managing Director and other executives are formalised in letters of appointment and employment agreements. These agreements provide details of the salary and employment conditions relating to each employee.

Participation in the Performance Rights Plan is subject to the Board’s discretion. Other major provisions of the agreements relating to remuneration in FY2018 are set out below.

All employment agreements comply with the provisions of Part 2, D.2, Division 2 of the Corporations Law.

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nameterm of agreement and notice period

Base salary (excluding superannuation)

termination payments

R Finlayson,

Managing Director

No fixed term

3 Months

$675,000pa If Mr Finlayson is terminated by the Company within 1 year following a “change of control” event, he will be entitled to a payment equal to 12 months earnings.Otherwise any other redundancy payment is calculated based on the Fair Work Act 2009. There are no other termination payments specified in Mr Finlayson’s contract other than the agreed notice period.

M Ball

Chief Financial Officer

No fixed term

3 Months by Employee

12 Months by Company for first year of employment and 9 months thereafter

$400,000pa If Mr Ball is terminated by the Company following a “change of control” event, he will be entitled to a payment equal to 12 months earnings if the change of control occurs in the first year of employment and 9 months earnings thereafter.Otherwise any other redundancy payment is calculated based on the Fair Work Act 2009.There are no other termination payments specified in Mr Ball’s contract other than the agreed notice period

S Jessop

Chief Operating Officer (appointed 11 December 2017)

No fixed term

3 Months by Employee

12 Months by Company for first year of employment and 9 months thereafter

$450,000pa If Mr Jessop is terminated by the Company following a “change of control” event, he will be entitled to a payment equal to 12 months earnings if the change of control occurs in the first year of employment and 9 months earnings thereafter.Otherwise any other redundancy payment is calculated based on the Fair Work Act 2009.There are no other termination payments specified in Mr Jessop’s contract other than the agreed notice period

D Howe,

Chief Geologist

No fixed term

3 Months

$300,000pa If Mr Howe is terminated by the Company within 1 year following a “change of control” event, he will be entitled to a payment equal to 6 months earnings.Otherwise any other redundancy payment is calculated based on the Fair Work Act 2009.There are no other termination payments specified in Mr Howe’s contract other than the agreed notice period

W T Irvin,

Chief Corporate Development Officer

No fixed term

3 Months

$300,000pa If Mr Irvin is terminated by the Company within 1 year following a “change of control” event, he will be entitled to a payment equal to 6 months earnings.Otherwise payment is calculated based on the Fair Work Act 2009.There are no other termination payments specified in Mr Irvin’s contract other than the agreed notice period

M Dravnieks

General Manager – People, Culture and Communications (appointed 6 March 2018)

No fixed term

3 Months

$275,000pa If Ms Dravnieks is terminated by the Company within 1 year following a “change of control” event, she will be entitled to a redundancy payment equal to 6 months earnings.Otherwise payment is calculated based on the Fair Work Act 2009.There are no other termination payments specified in Ms Dravniek’s contract other than the agreed notice period

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9. Non-Executive Director Arrangements

The Board is ultimately responsible for determining and reviewing remuneration arrangements for Directors, within the limits approved by shareholders for such remuneration. The maximum aggregate amount that can be paid for Non-Executive Directors remuneration is set at $800,000 as approved by shareholders at the AGM held on 30 November 2016.

The Board policy for determining the nature and amount of remuneration of Directors, as well as the relevant specific arrangements, are detailed below.

Non-Executive Directors’ remuneration is subject to review from time to time, as the Directors deem appropriate, having regard to the scope, scale and degree of complexity of the Group’s operations.

Non-Executive Directors receive a Board retainer fee. They do not receive performance based pay. The Chairman and the Non-Executive Directors do not receive additional fees for participating on a committee. All fees provided to Non-Executive Directors are inclusive of superannuation.

Base fees From 1 July 2017 From 1 december 2016 From 1 July 2016 From 1 July 2015 (including superannuation) to 30 June 2018 to 30 June 2017 to 30 november 2016 to 30 June 2016

Chairman $170,000 $170,000 $140,000 $140,000

Other non-executive directors $120,000 $120,000 $90,000 $90,000 (including committee membership)

10. Additional Statutory Information

10A. Relative proportion of Fixed vs Variable Remuneration expense

The following table shows the relative proportions of executive remuneration that are linked to performance and those that are fixed, based on the amounts disclosed as statutory remuneration expense in the tables above:

Fixed Remuneration At Risk - Sti At Risk – Lti

name 2018 2017 2018 2017 2018 2017

Executive Director

R Finlayson 41% 29% 15% 4% 44% 67%


M Ball 53% 76% 20% 6% 27% 18%

M Dravnieks 62% - 38% - - - (appointed 6 March 2018)

D Howe 55% 76% 20% 6% 24% 18%

W T Irvin 54% 76% 21% 7% 25% 17%

S Jessop 40% - 16% - 44% - (appointed 11 December 2017)

10B. details of Share Based compensation

performance Rights

Performance rights vest during the period after the performance period ended due to them being subject to final Board approval. The Performance Rights are expensed over the performance period consistent with the period over which the services have been performed.

The terms and conditions of each grant of Performance Rights affecting remuneration in the current or a future reporting period are as follows:

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Tranche 3 (Managing Director) – vested in FY2018

Grant date Vesting date performance period Value per performance % Vested Right at grant date

26 November 2014 – Class A 1 July 2017 1 July 2014 – 30 June 2017 $0.193 100%

26 November 2014 – Class B 1 July 2017 1 July 2014 – 30 June 2017 $0.275 100%

26 November 2014 – Class C 1 July 2017 1 July 2014 – 30 June 2017 $0.173 100%

Tranche 4 (KMP) – vested in FY2018


1 April 2015 – Class A 1 July 2017 1 July 2014 – 30 June 2017 $0.338 69%

1 April 2015 – Class B 1 July 2017 1 July 2014 – 30 June 2017 $0.410 69%

1 April 2015 – Class C 1 July 2017 1 July 2014 – 30 June 2017 $0.253 69%

Tranche 5 (Managing Director) – vested in FY2018


21 May 2015 – Class A 1 January 2017 21 May 2015 – 31 December 2016 $0.535 100%

21 May 2015 – Class B 17 March 2017 16 March 2015 – 16 March 2017 $0.451 100%

21 May 2015 – Class C 17 March 2018 16 March 2015 – 16 March 2018 $0.454 100%

Tranche 6 (KMP) – vested in FY2019


18 December 2015 – Class A 1 July 2018 1 July 2015 – 30 June 2018 $0.427 -

18 December 2015 – Class B 1 July 2018 1 July 2015 – 30 June 2018 $0.570 -

18 December 2015 – Class C 1 July 2018 1 July 2015 – 30 June 2018 $0.395 -

Tranche 7 (KMP) – to be assessed in FY2020


31 August 2016 – Class A 1 July 2019 1 July 2016 – 30 June 2019 $0.740 -

31 August 2016 – Class B 1 July 2019 1 July 2016 – 30 June 2019 $1.320 -

31 August 2016 – Class C 1 July 2019 1 July 2016 – 30 June 2019 $0.815 -

Tranche 8 (Managing Director) – to be assessed in FY2020


30 November 2016 – Class A 1 July 2019 1 July 2016 – 30 June 2019 $0.399 -

30 November 2016 – Class B 1 July 2019 1 July 2016 – 30 June 2019 $0.955 -

30 November 2016 – Class C 1 July 2019 1 July 2016 – 30 June 2019 $0.437 -

Tranche 9 (CFO) – vested in FY2019


18 January 2017 – Class A 1 July 2018 1 July 2015 – 30 June 2018 $0.496 -

18 January 2017 – Class B 1 July 2018 1 July 2015 – 30 June 2018 $1.165 -

18 January 2017 – Class C 1 July 2018 1 July 2015 – 30 June 2018 $0.727 -

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Name Financial Year of grant

Period in which Performance

Rights may vest

Number of Performance

Rights granted

Value of the Performance

Right at grant date

Number of Performance Rights vested

Vested %

R Finlayson tranche 3

2014/15 (Class A)

2014/15 (Class B)

2014/15 (Class C)

tranche 5

2015/16 (Class A)

2015/16 (Class B)

2015/16 (Class C)

tranche 8

2016/17 (Class A)

2016/17 (Class B)

2016/17 (Class C)

tranche 12

2017/18 (Class A)

2017/18 (Class B)

2017/18 (Class C)

2017/18

2017/18

2017/18

2016/17

2016/17

2017/18

2019/20

2019/20

2019/20

2020/21

2020/21

2020/21

294,000

147,000

294,000

2,000,000

3,000,000

5,000,000

74,000

37,000

74,000

330,000

132,000

198,000

$56,742

$40,425

$50,862

$1,070,000

$1,353,000

$2,270,000

$29,526

$35,335

$32,338

$311,190

$194,040

$291,060

294,000

147,000

294,000

2,000,000

3,000,000

5,000,000

-

-

-

-

-

-

100%

100%

100%

100%

100%

100%

-

-

-

-

-

-

Tranche 10 (CFO) – to be assessed in FY2020


18 January 2017 – Class A 1 July 2019 1 July 2016 – 30 June 2019 $0.538 -

18 January 2017 – Class B 1 July 2019 1 July 2016 – 30 June 2019 $1.165 -

18 January 2017 – Class C 1 July 2019 1 July 2016 – 30 June 2019 $0.792 -

Tranche 11 (COO) – to be assessed in FY2020





Tranche 12 (Managing Director) – to be assessed in FY2021


23 November 2017 – Class A 1 July 2020 1 July 2017 – 30 June 2020 $0.943 -

23 November 2017 – Class B 1 July 2020 1 July 2017 – 30 June 2020 $1.470 -

23 November 2017 – Class C 1 July 2020 1 July 2017 – 30 June 2020 $1.470 -

Tranche 13 (KMP) – to be assessed in FY2021





Rights granted under the plan carry no dividend or voting rights.

Details of performance rights provided as part of remuneration to key management personnel are shown below. The vesting conditions are set out in section “5 – Executive remuneration policy and framework”. Further information on the performance rights is set out in note 18 to the financial statements.

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Name Financial Year of grant

Period in which Performance

Rights may vest

Number of Performance

Rights granted

Value of the Performance

Right at grant date

Number of Performance Rights vested

Vested %

M Ball tranche 9

2016/17 (Class A)

2016/17 (Class B)

2016/17 (Class C)

tranche 10

2016/17 (Class A)

2016/17 (Class B)

2016/17 (Class C)

tranche 13

2017/18 (Class A)

2017/18 (Class B)

2017/18 (Class C)

2018/19

2018/19

2018/19

2019/20

2019/20

2019/20

2020/21

2020/21

2020/21

40,000

20,000

40,000

80,000

40,000

80,000

200,000

80,000

120,000

$19,840

$23,300

$29,080

$43,040

$46,600

$63,360

$220,400

$126,400

$189,600

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

d Howe tranche 4

2014/15 (Class A)

2014/15 (Class B)

2014/15 (Class C)

tranche 6

2015/16 (Class A)

2015/16 (Class B)

2015/16 (Class C)

tranche 7

2016/17 (Class A)

2016/17 (Class B)

2016/17 (Class C)

tranche 13

2017/18 (Class A)

2017/18 (Class B)

2017/18 (Class C)

2017/18

2017/18

2017/18

2018/19

2018/19

2018/19

2019/20

2019/20

2019/20

2020/21

2020/21

2020/21

68,000

34,000

68,000

80,000

40,000

80,000

34,000

17,000

34,000

150,000

60,000

90,000

$22,984

$13,940

$17,204

$34,160

$22,800

$31,600

$25,160

$22,440

$27,710

$165,300

$94,800

$142,200

68,000

34,000

68,000

-

-

-

-

-

-

-

-

-

100%

100%

100%

-

-

-

-

-

-

-

-

-

W t irvin tranche 4

2014/15 (Class A)

2014/15 (Class B)

2014/15 (Class C)

tranche 6

2015/16 (Class A)

2015/16 (Class B)

2015/16 (Class C)

tranche 7

2016/17 (Class A)

2016/17 (Class B)

2016/17 (Class C)

tranche 13

2017/18 (Class A)

2017/18 (Class B)

2017/18 (Class C)

2017/18

2017/18

2017/18

2018/19

2018/19

2018/19

2019/20

2019/20

2019/20

2020/21

2020/21

2020/21

52,000

26,000

52,000

80,000

40,000

80,000

34,000

17,000

34,000

150,000

60,000

90,000

$17,576

$10,660

$13,156

$34,160

$22,800

$31,600

$25,160

$22,440

$27,710

$165,300

$94,800

$142,200

52,000

26,000

52,000

-

-

-

-

-

-

-

-

-

100%

100%

100%

-

-

-

-

-

-

-

-

-

S Jessop tranche 11

2017/18 (Class A)

2017/18 (Class B)

2017/18 (Class C)

tranche 13

2017/18 (Class A)

2017/18 (Class B)

2017/18 (Class C)

2019/20

2019/20

2019/20

2020/21

2020/21

2020/21

180,000

90,000

180,000

225,000

90,000

135,000

$146,700

$142,200

$157,860

$247,950

$142,200

$213,300

-

-

-

-

-

-

-

-

-

-

-

-

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The assessed fair value at grant date of performance rights granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above.

Fair values at grant date are independently determined using a Monte Carlo simulation that takes into account the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate for the term of the performance right and the correlation of Group’s Total Shareholders Return (TSR) and share price to the TSR and share prices of the other companies within the peer group.

10c. equity instruments held by KMp

The tables below show, as at 30 June 2018, the number of:

(i) Performance Rights over Ordinary Shares in the Company granted under Performance Rights Plan, and

(ii) shares in the Company that were held during the financial year by Directors and KMP of the Group, including their relevant family members and entities related to them.

(i) Performance Rights holdings

30 June 2018 Balance at beginning Granted as Vested Lapsed Balance at end of of period 1 July 2017 remuneration and converted period 30 June 2018

DirectorsG Clifford - - - - -R Finlayson 5,920,000 660,000 (5,735,000) - 845,000M Connelly - - - - -M Reed - - - - -R Smith - - - - -S Tough - - - - -Key Management PersonnelM Ball 300,000 400,000 - - 700,000M Dravnieks - - - - - (appointed 6 March 2018)D Howe 455,000 300,000 (170,000) - 585,000W T Irvin 415,000 300,000 (130,000) - 585,000S Jessop - 900,000 - - 900,000 (appointed 11 December 2017)

Total 7,090,000 2,560,000 (6,035,000) - 3,615,000

(ii) Shareholdings

30 June 2018 Balance at beginning Granted as conversion of net change Balance at end of of period 1 July 2017 remuneration performance Rights - other period 30 June 2018

DirectorsG Clifford - - - - -R Finlayson 7,681,819 - 5,735,000 (3,500,000) 9,916,819M Connelly - - - - -M Reed 30,000 - - - 30,000R Smith - - - - -S Tough - - - - -Key Management PersonnelM Ball 5,000 - - - 5,000 (appointed 12 December 2016)M Dravnieks - - - 5,870 5,870 (appointed 6 March 2018)D Howe - - 170,000 (135,000) 35,000W T Irvin 34,000 - 130,000 (164,000) -S Jessop - - - - - (appointed 11 December 2017)

Total 7,750,819 - 6,035,000 (3,793,130) 9,992,689

10d. other transactions with KMp

During the year Director’s Fees of $120,000 (2017: $116,268) have been paid/are payable to PilotHole Pty Ltd, an entity controlled by Mr Martin Reed. The 2017 amount included an amount of $8,768 for professional services rendered for limited due diligence on one specific project.

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10e. use of remuneration consultants

The Company subscribes to the McDonald Gold & General Mining Industries Remuneration Report (Australasia) as prepared by Aon Hewitt Limited as a tool to use to bench mark remuneration levels of the Company against those of the peer group mining companies. These reports are received twice annually.

In addition, the Company subscribes to remuneration information from BDO Remuneration and Rewards Services to ensure that KMP remuneration information was considered in the market context.

In line with Company policy – Saracen obtains an independent review of its KMP remuneration every two years to ensure it remains in line with the market.

The Board is satisfied that the report is free from undue influence from any members of the key management personnel.

10F. Voting on the Remuneration Report at the 2017 AGM

At the Annual General Meeting held in November 2017, the Company received a “yes” vote of more than 95% on its Remuneration Report for the 2017 financial year. The Group did not receive any specific remuneration related feedback from shareholders at that meeting. During the year, the Company consulted with various shareholders and proxy advisory groups on its remuneration practices. Many of the comments and recommendations from these meetings have been incorporated into the Group’s Remuneration policy.

This concludes the audited Remuneration Report.

INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORSThe Company indemnifies all Directors of the Company named in this report and current and former KMP of the Group against all liabilities to persons (other than a Group company) which arise out of the performance of their normal duties as a Director or executive officer, unless the liability relates to conduct involving bad faith. The Company also has a policy to indemnify the Directors and executive officers against all costs and expenses incurred in defending an action that falls within the scope of the indemnity and any resulting payments. There are Director’s Deed of Access, Indemnity and Insurance in place for all Directors of the Company.

The contract of insurance prohibits disclosure of the amount of the premium and the nature of the liabilities insured under the policy.

During the year the Company paid the premium on a Personal Accident - Working Director insurance policy on behalf of the Managing Director as normal workers compensation insurance coverage for company directors is not allowed under the Western Australian Worker’s Compensation scheme.

Other than to the extent permitted by law, the Group has not, during or since the financial year, indemnified or agreed to indemnify an auditor of the Group or any related body corporate against a liability incurred as an auditor.

AUDITOR’S INDEPENDENCE DECLARATIONThe auditor’s independence declaration is attached to this report.

NON-AUDIT SERVICESDuring the year BDO Corporate Tax (WA) Pty Ltd, a related party of the Group’s auditor, provided advisory tax services in addition to audit services. BDO Corporate Tax (WA) Pty Ltd received, or are due to receive, $1,200 (2017: $60,036 - BDO Reward (WA) Pty Ltd together with BDO Corporate Tax (WA) Pty Ltd) for the non-audit services. The Directors are satisfied that the provision of these services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 and do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

ROUNDING OF AMOUNTSThe Company is a company of the kind referred to in ASIC Instrument 2016/191, dated 1 April 2016, and in accordance with that Instrument amounts in the Directors’ Report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001.

For and on behalf of the board

RALEIGH FINLAYSON

Managing Director 21 August 2018

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AuDITOR’S independence decLARAtion

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees

DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF SARACEN MINERAL HOLDINGS LIMITED

As lead auditor of Saracen Mineral Holdings Limited for the year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

2. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Saracen Mineral Holdings Limited and the entities it controlled during the period.

Phillip Murdoch

Partner

BDO Audit (WA) Pty Ltd

Perth, 21 August 2018

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

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2018 2017 Note $’000 $’000

Revenue from continuing operations 2 510,961 423,058

Mine operating costs (281,174) (282,262)

Depreciation and amortisation 2 (94,346) (74,679)

Royalties (17,835) (14,552)

Gross profit from mining operations 117,606 51,565

Administration expenses 2 (10,048) (10,317)

Share based payments expense 18 (3,379) (2,736)

Finance costs 2 (411) (764)

Other revenue 2 1,213 522

Profit on disposal of King of the Hills 10,594 -

Profit/(Loss) on disposal of fixed assets - (39)

Expensing of deferred exploration costs 11 (1,405) (2,477)

Impairment of assets 11 (896) (2,776)

Profit before income tax 113,274 32,978

Income tax expense 4 (37,689) (4,592)

Profit after income tax for the period 75,585 28,386

Other comprehensive income/(loss), net of income tax

Items that may be reclassified subsequently to profit or loss

Fair value profit on available for sale investments 16(e) 2,609 -

Other comprehensive profit for the year, net of income tax 2,609 -

Total comprehensive income attributable to members of Saracen Mineral Holdings Limited 78,194 28,386

Earnings per share for the year attributable to the members of Saracen Mineral Holdings Limited:

Basic earnings (cents per share) 5 9.29 3.52

Diluted earnings (cents per share) 5 9.21 3.47

conSoLidAted StAteMent oF PROFIT OR LOSS And OTHER COMPREHENSIvE INCOMEFor the Financial Year ended 30 June 2018

The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the notes to the financial statements.

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2018 2017 Note $’000 $’000

Current assets

Cash and cash equivalents 20(a) 99,774 33,726

Trade and other receivables 6 9,340 6,353

Other financial assets - 7

Inventories 7 52,323 32,924

Other assets 8 1,239 1,357

Assets classified as held for sale 13 450 21,961

Total current assets 163,126 96,328

Non-current assets

Other financial assets 9 11,737 55

Buildings, plant and equipment 10 99,475 93,751

Deferred exploration and evaluation costs 11 53,556 46,764

Mine properties 12 195,330 167,559

Total non-current assets 360,098 308,129

Total assets 523,224 404,457

Current liabilities

Trade and other payables 14 44,208 39,253

Borrowings 163 -

Provisions 15 8,281 6,636

Liabilities classified as held for sale 13 - 16,086

Total current liabilities 52,652 61,975

Non-current liabilities

Deferred tax liabilities 4 39,210 5,986

Provisions 15 50,198 42,488

Total non-current liabilities 89,408 48,474

Total liabilities 142,060 110,449

Net assets 381,164 294,008

Equity

Contributed equity 16(a) 259,991 256,740

Reserves 16(e) 17,233 8,913

Retained profits 103,940 28,355

Total equity 381,164 294,008

conSoLidAted StAteMent oF FINANCIAL POSITIONAs at 30 June 2018

The consolidated statement of financial position should be read in conjunction with the notes to the financial statements.

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conSoLidAted StAteMent oF CHANGES IN EQuITYFor the Financial Year ended 30 June 2018

(Accumulated investment Share Based contributed Losses) / Revaluation payments total equity Retained profits Reserve Reserves $’000 $’000 $’000 $’000 $’000

As at 1 July 2017 256,740 28,355 - 8,913 294,008

Profit for the year after tax - 75,585 - - 75,585

Other comprehensive income - - 2,609 - 2,609

Total comprehensive profit/(loss) for the year after tax - 75,585 2,609 - 78,194

Transactions with owners in their capacity as owners

Share based payments 335 - - 3,044 3,379

Vesting of performance rights 2,916 - - (2,916) -

Tax effect on share based payments - - - 5,583 5,583

As at 30 June 2018 259,991 103,940 2,609 14,624 381,164

As at 1 July 2016 253,013 (31) - 7,736 260,718

Profit for the year after tax - 28,386 - - 28,386

Other comprehensive loss - - - - -

Total comprehensive profit/(loss) for - 28,386 - - 28,386 the year after tax

Transactions with owners in their capacity as owners

Share based payments - - - 2,736 2,736

Vesting of performance rights 3,727 - - (3,727) -

Tax effect on share based payments - - - 2,168 2,168

As at 30 June 2017 256,740 28,355 - 8,913 294,008

The consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.

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conSoLidAted StAteMent oF CASH FLOwSFor the Financial Year ended 30 June 2018

2018 2017 Note $’000 $’000

Cash flows from operating activities

Receipts from customers 510,961 423,058

Payments to suppliers and employees (320,129) (297,154)

Interest received 989 331

Interest paid and other finance costs (396) (603)

Net cash flows provided by operating activities 20(b) 191,425 125,632

Cash flows from investing activities

Purchase of plant, equipment and development assets (121,617) (105,009)

Exploration and evaluation costs (8,580) (12,842)

Disposal of mine properties 4,970 -

Purchase of equity shares (319) -

Disposal of equity shares 6 -

Net cash flows used in investing activities (125,540) (117,851)

Cash flows from financing activities

Payment of finance lease liabilities (1,440) (7,648)

Proceeds from finance lease liabilities 1,603 (709)

Net cash flows provided by/ (used) in financing activities 163 (8,357)

Net increase/ (decrease) in cash held 66,048 (576)

Add opening cash brought forward 33,726 34,302

Closing cash carried forward 20(a) 99,774 33,726

The consolidated statement of cash flows should be read in conjunction with the notes to the financial statements.

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1 SuMMARY oF SiGniFicAnt AccountinG poLicieS

(a) Reporting Entity

Saracen Mineral Holdings Limited is a for-profit, public company listed on the Australian Securities Exchange (trading under the code: ‘SAR’), incorporated and operating in Australia.

Operations and Principal Activities

The operations and principal activities comprise mineral development and exploration.

Registered Office

Level 11, 40 The Esplanade, Perth Western Australia 6000.

(b) Basis of preparation

Statement of compliance

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).

The consolidated financial statements were authorised for issue by the Board of Directors on 21 August 2018

Basis of measurement

The consolidated financial statements have been prepared on a going concern basis in accordance with the historical cost convention, unless otherwise stated.

Functional and presentation currency

These consolidated financial statements are presented in Australian dollars, which is the Group’s functional currency.

Rounding off

The Company is a company of the kind referred to in ASIC Instrument 2016/191, dated 1 April 2016, and in accordance with that Instrument amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise stated.

New, revised or amended standards and interpretations adopted by the group

The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity.

The following Accounting Standards and Interpretations are most relevant to the Group:

(i) AASB 2016-1 ‘Amendments to Australian Accounting Standards – Recognition of deferred tax Assets for unrealised Losses’

(ii) AASB 2016-2 ‘Amendments to Australian Accounting Standards – disclosure initiative: Amendments to AASB 107’

(iii) AASB 2017-2 ‘Amendments to Australian Accounting Standards – Further Annual improvements 2014-2016 cycle’.

New standards and interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2018. The consolidated entity’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below.

NOTES to tHe FinAnciAL StAteMentSFor the Financial Year ended 30 June 2018

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1 SuMMARY oF SiGniFicAnt AccountinG poLicieS (continued)

(b) Basis of preparation (continued)

(i) AASB 9 Financial instruments and its consequential amendments

This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2018 and completes phases I and III of the IASB’s project to replace IAS 39 (AASB 139) ‘Financial Instruments: Recognition and Measurement’. This standard introduces new classification and measurement models for financial assets, using a single approach to determine whether a financial asset is measured at amortised cost or fair value. The accounting for financial liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity’s own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. Chapter 6 ‘Hedge Accounting’ supersedes the general hedge accounting requirements in AASB 139 and provides a new simpler approach to hedge accounting that is intended to more closely align with risk management activities undertaken by entities when hedging financial and non-financial risks. The Group will adopt this standard and the amendments from 1 July 2018. It is not expected for the application of the new standard to have a significant impact on the Group’s financial statements.

(ii) AASB 15 Revenue from contracts with customers

The AASB has issued this new standard for the recognition of revenue. This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard will replace AASB 118 which covers contracts for goods and services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer – so the notion of control replaces the existing notion of risks and rewards. It is not expected for the application of the new standard to have a significant impact on the Group’s financial statements.

(iii) AASB 16 Leases

AASB 16 will replace AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases – Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The Standard will provide a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors.

The new Standard introduces three main changes:

• Enhanced guidance on identifying whether a contract contains a lease,

• A completely new leases accounting model for lessees that require lessees to recognise all leases on balance sheet, except for short-term leases and leases of low value assets, and

• Enhanced disclosures.

Lessor accounting will not significantly change.

The Group will adopt this standard and the amendments from 1 July 2019. The standard is likely to affect future financial reporting and the Group is still assessing all of the potential consequences. The standard is likely to impact the Group’s mining contractor, property lease and powerhouse contracts. The Group expects that AASB 16 will result in an increase in assets and liabilities as fewer contracts will qualify as operating leases and thus will not be expensed as payments are made. The Group also expects an increase in depreciation expense and an increase in cash flow from operating activities as these lease payments will now be recorded as financing outflows in our cash flow statement.

Significant Judgements, Estimates and Assumptions

The preparation of the Group’s consolidated financial statements requires management to make judgements estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

In particular, the Group has identified a number of areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are either described with the associated accounting policy note or are described below:

noteS to tHe FinAnciAL StAteMentS (continued)For the Financial Year ended 30 June 2017

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(b) Basis of preparation (continued)

These include:

Judgements, estimates and assumptions:

• Exploration and evaluation expenditure (note 11)

• Impairment of assets (note 1(d))

• Inventories (note 7)

• Mine rehabilitation (note 15)

• Ore reserve estimates (note 12)

• Production start date (note 12)

• Recovery of deferred tax assets (note 4)

• Share based payments (note 18)

• Stripping costs (note 12)

(c) Principles of Consolidation

Subsidiaries

The consolidated financial statements comprise the financial statements of Saracen Mineral Holdings Limited and its subsidiaries (the Group) as at 30 June each year.

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

The acquisition method of accounting is used to account for business combinations by the Group.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses from intra-group transactions have been eliminated in full. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

(d) Impairment of Assets

The Group undertakes an impairment review to determine whether any indicators of impairment are present. Where indicators of impairment exist, an estimate of the recoverable amount of the Cash Generating Unit (CGU) is made. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Where an impairment loss subsequently reverses, the carrying amount of the asset, other than goodwill, is increased to the revised estimate of its recoverable amount, but only to the extent the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

An impairment indicator assessment was undertaken for all operations at reporting date. The Wallbrook operations were impaired by $0.9m due to the carrying amount of the assets exceeding the fair value less cost to sell (refer to note 11).

Significant judgements, estimates and assumptions

Assessments of the recoverable amounts require the use of estimates and assumptions such as reserves, mine lives, discount rates, exchange rates, commodity prices, grade of ore mined, recovery percentage, operating performance, costs and capital estimates.

(e) Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with the current year disclosures.

1 SuMMARY oF SiGniFicAnt AccountinG poLicieS (continued)

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2 ReVenue And eXpenSeS

Accounting Policy

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must be met before revenue is recognised:

Gold and silver sales

Revenue from the sale of gold and silver is measured at fair value of the consideration received or receivable. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer.

Interest income

Interest income is recognised when the Group gains control of the right to receive the interest payment.

2018 2017 $’000 $’000

Gold sales 510,071 422,148

Silver sales 890 910

Revenue from continuing operations 510,961 423,058

Interest revenue 989 331

Other 224 191

Other revenue 1,213 522

Total revenue 512,174 423,580

Amortisation of mine properties 62,690 52,424

Amortisation of deferred mining expenditure 12,351 5,437

Depreciation of plant and equipment 19,305 16,818

Depreciation and amortisation 94,346 74,679

Directors and employee expenses 6,981 6,796

Professional fees 1,309 1,043

Other 1,758 2,478

Administration expenses 10,048 10,317

Borrowing costs 411 764

Finance costs 411 764

Perth office rental 404 395

Operating lease rentals 404 395

Defined contribution superannuation expense 4,338 3,925

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3 AuditoR’S ReMuneRAtion

2018 2017 $’000 $’000

Amounts received or due and receivable by the auditor of the Group for: BDO Audit (WA) Pty Ltd

- Audit / review of the financial report 115 98

Amounts received or due and receivable by an associate of the auditor of the Group for:

BDO Corporate Tax (WA) Pty Ltd

- Tax services 1 43

BDO Reward (WA) Pty Ltd

- Remuneration benchmarking - 17

4 incoMe tAX

Accounting Policy

current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises assets and liabilities for the potential tax effect based on the Group’s current understanding of tax laws and requirements. Where the final tax outcome of these items is different from the carrying amounts, such differences will impact the current and deferred tax assets and/or provisions in the period in which such determination is made.

deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.


Deferred tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group will comply with the relevant tax legislation and will generate sufficient taxable earnings in future periods in order to recognise and utilise those deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations. These assessments require the use of estimates and assumptions such as commodity prices, exchange rates and operating performance over the life of the assets.

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4 incoMe tAX (continued)

Goods and Services tax (GSt)

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GSt incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GSt is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable, and

• receivables and payables are stated with the amount of GSt included.

The amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

2018 2017 $’000 $’000

(a) Income tax expense comprises:

Current income tax

- Current income tax charge / (benefit) - -

- Under / (over) recognition in the prior year - -

Deferred tax

- Movement in temporary differences 33,998 4,592

- Recognition of previously unrecognised temporary differences 3,691 -

Income tax expense 37,689 4,592

(b) Reconciliation of prima facie income tax expense to income tax expense per the Consolidated Statement of Profit or Loss and Comprehensive Income:

Accounting profit before tax 113,274 32,978

Prime facie income tax expense at 30% (2017: 30%) 33,982 9,894

- Non-deductible expenses 16 14

- Recognition of previously unrecognised temporary differences 3,691 (5,316)

Income tax expense 37,689 4,592

Effective tax rate 33% 14%

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4 incoMe tAX (continued)

(c) Deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Balance at charged / charged / Balance at 1 July 2017 credited to income credited to equity 30 June 2018 $’000 $’000 $’000 $’000

Deferred tax assets

Tax losses 26,192 (20,033) - 6,159

Provisions 19,380 (2,673) - 16,707

Other 545 389 - 934

Undeducted share issue costs 200 (198) - 2

Share based payments 3,870 (6,447) 5,583 3,006

Non-refundable R&D offset 71 (38) - 33

Total 50,258 (29,000) 5,583 26,841

Deferred tax liabilities

Deferred mining expenditure (55,120) (6,853) - (61,973)

Property, plant and equipment (445) (1,672) - (2,117)

Investments 32 (32) (1,118) (1,118)

Inventories (711) (132) - (843)

Total (56,244) (8,689) (1,118) (66,051)

Net deferred tax asset / (liability) (5,986) (37,689) 4,465 (39,210)

Balance at charged / charged / Balance at 1 July 2016 credited to income credited to equity 30 June 2017 $’000 $’000 $’000 $’000

Deferred tax assets

Tax losses 22,031 4,161 - 26,192

Provisions 18,251 1,129 - 19,380

Other 212 365 - 577

Undeducted borrowing cost 2 (2) - -

Undeducted share issue costs 352 (152) - 200

Share based payments - 1,702 2,168 3,870

Non-refundable R&D offset - 71 - 71

Total 40,848 7,274 2,168 50,290

Deferred tax liabilities

Deferred mining expenditure (44,914) (10,206) - (55,120)

Property, plant and equipment 504 (949) - (445)

Inventories - (711) - (711)

Total (44,410) (11,866) - (56,276)

Net deferred tax asset/(liability) (3,562) (4,592) 2,168 (5,986)

Deferred tax liabilities are set-off against deferred tax assets pursuant to set-off provisions.

(d) Tax-consolidated group

Saracen Mineral Holdings Limited and its wholly-owned subsidiaries formed a tax consolidated group with effect from 1 July 2003. Saracen Mineral Holdings Limited is the head entity in the tax consolidated group.

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5 eARninGS peR SHARe

Accounting Policy

Basic earnings per share is calculated as profit/(loss) after tax attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as profit/(loss) after tax attributable to members, adjusted for costs of servicing equity (other than dividends) and preference share dividends, the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses, and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

The following reflects the income and share data used in the calculations of basic and diluted earnings per share after tax attributable to members of the company.

2018 2017 $’000 $’000

Net profit after income tax from continuing operations 75,585 28,386

75,585 28,386

Number Number

Weighted average number of ordinary shares for basic earnings per share 814,021,324 806,848,268

Effect of dilution - performance rights 6,582,344 11,079,945

Weighted average number of ordinary shares adjusted for the effect of dilution 820,603,668 817,928,213

Basic earnings (cents per share) 9.29 3.52

2018 2017 $’000 $’000

6 tRAde And otHeR ReceiVABLeS

Accounting Policy

Receivables to be settled within 30 - 90 days are carried at amounts due. The collectability of debts is assessed at the reporting date and specific allowance is made for any doubtful accounts.

Current

Goods and services tax (GST) recoverable 3,100 5,452

Deferred Consideration - King of the Hills 4,500 -

Deferred Consideration - Red October 550 -

Other 1,190 901

9,340 6,353

The Group’s exposure to credit and market risks is disclosed in note 23.

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7 inVentoRieS

Accounting Policy

Raw materials and stores are valued at the lower of cost and net realisable value. Regular reviews are undertaken to establish whether any items are obsolete or damaged, and if so their carrying value is written down to net realisable value.

Inventories of ore and gold in circuit are valued at the lower of cost and net realisable value. Costs comprise direct material, labour and an appropriate proportion of variable and fixed overhead on the basis of normal operating capacity, and are included as part of mine operating costs in the consolidated statement of profit or loss and comprehensive income. Net realisable value is the estimated selling price in the ordinary course of business less processing cost and the estimated selling cost.

If the ore stockpile is not expected to be processed in 12 months after reporting date, it is included in non-current assets and the net realisable value is calculated on a discounted cash flow basis.


Inventories require certain estimates and assumptions most notably in regards grades, volumes and densities.

Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained ounces based on assay data, and the estimated recovery percentage. Stockpile tonnages are verified to periodic surveys.

Net reliable value tests are performed at each reporting date and represent the estimate future sales price of gold, less cost of completion (processing costs) and the estimated cost necessary to perform the sale.

Such estimates and assumptions may change as new information becomes available and could impact on the carrying value of inventories.

2018 2017 $’000 $’000

Ore stocks (at cost) 26,812 9,182

Gold in circuit (at cost) 7,866 5,786

Gold in transit (at cost) 5,250 6,396

Consumable supplies and spares 12,395 11,560

52,323 32,924

8 otHeR ASSetS

Prepayments 1,239 1,357

Prepayments mainly consist of prepaid amounts for insurance and establishment and professional fees on the Company’s debt facilities.

9 otHeR FinAnciAL ASSetS

Accounting Policy

Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

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9 otHeR FinAnciAL ASSetS (continued)

Recognition and derecognition

Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit and/or loss are initially recognised at fair value and transaction costs are expensed in the statement of profit or loss and other comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the statement of profit or loss and other comprehensive income as gains and losses from investment securities.

Subsequent measurement

Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.

Available-for-sale financial assets are subsequently carried at fair value. Gains on available-for-sale financial assets are recognised in other comprehensive income.

Details on how the fair value of financial instruments is determined is disclosed in note 23.

impairment

The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the statement of profit or loss and other comprehensive income.

2018 2017 $’000 $’000

non-current

Security deposits 55 55

Available for sale financial assets 11,682 -

11,737 55

During the period Saracen acquired 130.6 million shares in Red 5 Limited (“Red 5”)(ASX: RED). 90 million Red 5 shares were received as part of the consideration for the sale of Saracen’s King of the Hills operation (refer ASX announcement dated 3 August 2017) and Saracen also purchased an additional 40.6 million shares as a participant in the associated Rights Issue conducted by Red 5 as part of its Eastern Goldfields strategy. 90 million Red 5 shares are escrowed for 12 months until 1 October 2018.

As part of consideration received for the Wallbrook Project sale, Saracen received 1.49 million shares in Nexus Minerals Limited (ASX: NXM). In addition to this, Saracen purchased additional 3.8 million shares in Nexus Minerals Limited during the financial year. Refer note 11 and note 13 for further details.

As part of consideration received for the Red October sale, Saracen received 4.545 million shares in Matsa Resources Limited (ASX: MAT). Refer note 13 for further details.

Nexus and Matsa shares held are saleable and have no contracted liquidity restrictions.

The value of listed shares has been determined by reference to the quoted last trade price at the close of business on reporting date.

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10 BuiLdinGS, pLAnt And eQuipMent

Accounting Policy

Buildings, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation is calculated on a straight-line method over the estimated useful life, or over the remaining life of mine if that is shorter and there is no alternative use for the asset. The useful lives of major assets of a cash-generating unit are often dependant on the lives of the orebodies in the region to which they relate. Where the major assets of a cash-generating unit are not dependant on the life of a related ore orebody, management applies judgement in estimating the remaining service potential of long-lived assets.

The following useful lives are used in the calculation of depreciation:

Plant and equipment 3 – 33 years

Capital work in progress is projects of a capital nature which usually relates to the construction/installation of buildings, plant or equipment. Upon completion (when ready for use) capital work in progress is transferred to the relevant asset category. Capital work in progress is not depreciated.

Where depreciation is attributable to exploration and evaluation activities, costs are treated in accordance with the Accounting Policy in note 11. The assets’ residual value, useful lives and amortisation methods are reviewed at each financial year end and if appropriate adjusted.

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10 BuiLdinGS, pLAnt And eQuipMent (continued)

2018 2017 $’000 $’000

Buildings, plant and equipment

Opening balance net of accumulated depreciation 81,496 77,971

Additions 5,168 2,889

Transfer from capital work in progress 22,073 18,258

Transfer from mines under construction - 311

Disposals - (39)

Transfer to assets classified as held for sale (note 13) - (1,242)

Depreciation (19,119) (16,652)

Closing balance net of accumulated depreciation 89,618 81,496

Capital work in progress

Opening balance net of accumulated depreciation 12,255 6,826

Additions 20,071 25,125

Transfer to mines in production (253) (1,230)

Transfer to mines under construction (143) (208)

Transfer to plant and equipment (22,073) (18,258)

Closing balance net of accumulated depreciation 9,857 12,255

Accumulated depreciation

Opening balance 67,976 52,876

Depreciation 19,119 16,652

Disposals (132) (121)

Transfer to assets classified as held for sale (note 13) - (1,431)

Closing balance 86,963 67,976

Cost 186,438 161,727

Accumulated depreciation (86,963) (67,976)

Net carrying amount 99,475 93,751

11 deFeRRed eXpLoRAtion And eVALuAtion coStS

Accounting Policy

Exploration and evaluation costs related to areas of interest are carried forward to the extent that:

• the rights to tenure of the areas of interest are current and the Group controls the area of interest in which the expenditure has been incurred, and

• such costs are expected to be recouped through successful development and exploitation of the area of interest, or alternatively by its sale, or

• exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation costs include the acquisition of rights to explore, studies, exploratory drilling, sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

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11 deFeRRed eXpLoRAtion And eVALuAtion coStS (continued)

The above accounting policy requires certain estimates and assumptions on future events and circumstances, in particular whether an economically viable extraction operation can be established. These estimates and assumptions may change as new information becomes available and could have a material impact on the carrying value of deferred exploration and evaluation costs. Exploration and evaluation assets are assessed for impairment where facts and circumstances suggest that the carrying amount of the assets may exceed its recoverable amount. If the recoverable amount is less than the carrying amount, the asset is written down to its recoverable amount and an impairment loss recognised.

Where economically recoverable reserves for an area of interest have been identified, and a decision to develop has occurred, capitalised expenditure is classified as mines under construction. In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of no value, accumulated costs carried forward are written off in the year in which that assessment is made.


The application of the Group’s accounting policy for exploration and evaluation expenditure requires certain estimates and assumptions on future events and circumstances, in particular whether an economically viable extraction operation can be established. These estimates and assumptions may change as new information becomes available and could have a material impact on the carrying value of deferred exploration and evaluation costs. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the relevant capitalised amount is written off in the statement of profit or loss and other comprehensive income in the period when the new information becomes available.

2018 2017 $’000 $’000

Deferred exploration and evaluation costs

Balance at the start of the year 46,764 43,552


Transferred to mines in production - (26)

Exploration expensed (1,405) (2,477)

Disposal of tenements (125) -

Impairment on tenements sold* (896) -

Transferred to assets classified as held for sale (note 13) - (7,153)

Balance at the end of the year 53,556 46,764

* In April 2018, Saracen entered into a binding agreement to sell the Wallbrook Project to Nexus Minerals Limited (ASX:NSM) for a consideration of 1.49 million Nexus Minerals Limited shares at a deemed share price of $0.08.

An impairment of $896,000 was recognised during the period relating to the Wallbrook tenements as the carrying values exceeded the fair value less cost of disposal of the asset. The fair value of the Wallbrook asset has been determined based on the agreed sale price.

The ultimate recoupment of costs carried forward is dependent on the successful development and commercial exploitation or sale of the areas of interest.

12 Mine pRopeRtieS

Accounting Policy

Mines under construction are accumulated separately for each area of interest in which economically recoverable reserves have been identified and a decision to develop has occurred. This expenditure includes all capitalised exploration and evaluation expenditure in respect of the area of interest, direct costs of construction, an appropriate allocation of overheads and where applicable borrowing costs capitalised during construction. Once mining of the area of interest can commence, the aggregated capitalised costs are classified under non-current assets as mines in production or an appropriate class of property, plant and equipment.

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12 Mine pRopeRtieS (continued)

Accounting Policy (continued)

Mines in production represent the aggregated exploration and evaluation expenditure and capitalised development costs in respect of areas of interest in which mining is ready to or has commenced. Mine development costs are deferred until commercial production commences, at which time they are amortised on a units-of-production basis over the mineable reserves. Once production commences, further development expenditure is classified as part of the cost of production, unless substantial future economic benefits can be established.

Deferred stripping costs represent certain mining costs, principally those that relate to the stripping of waste, which provides access so that future economically recoverable ore can be mined. Stripping (i.e. overburden and other waste removal) costs incurred in the production phase of a surface mine are capitalised to the extent that they improve access to an identified component of the ore body and are subsequently amortised on a systematic basis over the expected useful life of the identified component of the ore body. Capitalised stripping costs are disclosed as a component of Mine Properties.

Components of an ore body are determined with reference to life of mine plans and take account of factors such as the geographical separation of mining locations and/or the economic status of mine development decisions.

Capitalised stripping costs are initially measured at cost and represent an accumulation of costs directly incurred in performing the stripping activity that improves access to the identified component of the ore body, plus an allocation of directly attributable overhead costs.

The amount of stripping costs deferred is based on a relevant production measure which uses a ratio obtained by dividing the tonnage of waste mined by the quantity of ore mined for an identified component of the ore body. Stripping costs incurred in the period for an identified component of the ore body are deferred to the extent that the current period ratio exceeds the expected waste to ratio for the life of the identified component of the ore body. Such deferred costs are then charged against the statement of profit or loss when the stripping ratio falls below the life of mine ratio. These are a function of the mine design and therefore any changes to the design will generally result in changes to the ratio. Changes in other technical or economic parameters that impact on reserves may also have an impact on the component ratio even though they may not impact the mine design.

Changes to the life of mine plan, identified components of an ore body, stripping ratios, units of production and expected useful life are accounted for prospectively.

Deferred stripping costs form part of the total investment in a cash generating unit, which is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.


Significant judgement is required to distinguish between development stripping and production stripping and to distinguish between the production stripping that relates to the extraction of inventory and that which relates to the creation of a stripping asset.

Once the Group has identified its production stripping for each surface mining operation it identifies the separate components of the ore bodies for each of its mining operations. An identifiable component is a specific volume of the ore body that is made more accessible by the stripping activity. Significant judgement is required to identify and define these components, and also to determine the expected volumes of waste to be stripped and ore to be mined in each of these components. These assessments are undertaken for each individual mining operation based on the information available in the mine plan.

Judgement is also required to identify a suitable production measure to be used to allocate production stripping costs between inventory and any stripping activity asset(s) for each component. The Group considers that the ratio of the expected volume (e.g. tonnes) of waste to be stripped for an expected volume (e.g. in tonnes) of ore to be mined for a specific component of the ore body, is the most suitable production measure.

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Reserve estimates

Estimates of recoverable quantities of proven and probable reserves include assumptions regarding commodity prices, exchange rates, discount rates, recovery rates and production and transportation costs for future cash flows. It also requires interpretation of complex and difficult geological and geophysical models in order to make an assessment of the size, shape, depth and quality of reserves and their anticipated recoveries. The economic, geological and technical factors used to estimate reserves may change from period to period. Changes in reported reserves can impact asset carrying values, the provision for restoration and the recognition of deferred tax assets, due to changes in expected future cash flows. Reserves are integral to the amount of depreciation, depletion and amortisation charged to the profit or loss and the calculation of inventory. The Group prepares reserve estimates in accordance with the JORC Code, guidelines prepared by the Joint Ore Reserves Committee of The Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia.

Significant judgements and estimates

The determination of ore reserves impacts the accounting for asset carrying values.

There are numerous uncertainties inherent in estimating ore reserves, and assumptions that are valid at the time of estimation may change significantly when new information becomes available.

Changes in the forecast commodity prices, exchange rates, discount rates, recovery rates and production and transportation costs may change the economic status of reserves and may ultimately results in reserves being restated.

Production Start Date


The Group assesses the stage of each mine under construction to determine when a mine moves into the production phase, this being when the mine is substantially complete and ready for its intended use. The Group considers various relevant criteria to assess when the production phase is considered to have commenced. At this point, all related amounts are reclassified from ‘Mines under construction’ to ‘Mines in production’. Some of the criteria used to identify the production start date include, but are not limited to:

• Level of capital expenditure incurred compared with the original construction cost estimate,

• Completion of a reasonable period of testing of the mine plant and equipment,

• Ability to produce metal in saleable form (within specifications),

• Ability to sustain ongoing production of metal, and

• Positive cash flow position from operations.

When a mine development project moves into the production phase, the capitalisation of certain mine development costs and pre-production revenues cease and costs are either regarded as forming part of the cost of inventory or expensed, except for costs that qualify for capitalisation relating to mining asset additions or improvements, underground mine development or mineable reserve development. It is also at this point that amortisation commences.

Impairment of mine properties


A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. An impairment exists when the carrying value of mine properties exceeds its estimated recoverable amount. The asset is then written down to its recoverable amount and the impairment losses are recognised in profit or loss.F

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2018 2017 $’000 $’000

Mine properties

Mines under construction 47,272 91,836

Mines in production 121,695 68,868

Deferred mining expenditure 26,363 6,855

Total 195,330 167,559

Mines under construction


Additions 13,447 35,388

Transferred from capital work in progress 143 208

Transferred to mines in production (57,887) (15,310)

Transferred to plant and equipment - (311)


Change in rehabilitation provision (267) (1,387)


Mines in production


Additions 51,122 36,841

Transferred from capital work in progress 253 1,230

Transferred from deferred exploration and evaluation costs 3,075 26

Transferred from mines under construction 57,887 15,310

Amortisation for the year (62,690) (52,424)


Change in rehabilitation provision 3,180 28


The Group undertakes regular impairment reviews incorporating an assessment of recoverability of cash generating assets. Cash generating assets relate to specific areas of interest in the Group’s mine property assets. The recoverable value of specific areas of interest are assessed by value in use calculations determined with reference to the projected net cash flows estimated under the life of mine plan.

2018 2017 $’000 $’000

Deferred mining expenditure



Amortisation of deferred mining expenditure (12,351) (5,437)


Deferred mining expenditure relates to capitalised overburden of the Thunderbox and Kailis open pit mines.

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13 diSpoSAL GRoup HeLd FoR SALe

Accounting Policy

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered primarily through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the Statement of Financial Position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the Statement of Financial Position.

In March 2017, Saracen started to actively market the sale of the King of the Hills and Red October projects. At this point in time the assets and associated liabilities were available for immediate sale and the sale was highly probable within a 12 month period as management was committed to sell these projects and there was an active programme to locate a buyer. Hence, both these projects were classified as Assets and Liabilities Held for Sale in the previous financial year.

The King of the Hills sale was completed in October 2017, with a gain on disposal of $10.6 million recognised in the profit or loss. The consideration comprised:

• $7 million upfront cash (consideration for the purchase of additional 40.6m underwriting shares of $2.03m was offset against the upfront cash payment, reducing the total cash received by Saracen to $4.97m),

• 90 million Red 5 shares (at a deemed price of $0.05) escrowed for 12 months,

• $4.5 million in cash or Red 5 shares (at Saracen’s election) 12 months after completion, and

• Red 5 to assume all environmental liabilities.

On 26 September 2017, Saracen announced the signing of a binding agreement to sell the Red October gold mine to ASX-listed gold company Matsa Resources Limited (ASX: MAT) (Matsa). The consideration for Red October comprises:

• $1 million cash,

• 4.545 million Matsa shares (at a deemed price of $0.22), and

• Matsa to assume all environmental liabilities.

The Red October sale was completed in March 2018, however three tenements that were part of the original agreement have not yet been able to be transferred and as a result $450,000 was withheld until the matter is resolved. As a result, these deferred exploration assets have been recognised as assets held for sale at 30 June 2018.

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13 diSpoSAL GRoup HeLd FoR SALe (continued)

(a) Assets and liabilities of the disposal group classified as held for sale

The following assets and liabilities were reclassified as held for sale as at 30 June 2018 and 30 June 2017:

2018 2017 $’000 $’000

Assets

Plant and equipment (net of accumulated depreciation) - 1,242

Deferred exploration 450 7,153

Mine properties - 16,342

Less: Impairment of assets - (2,776)

450 21,961

Liabilities

Rehabilitation provisions - 16,086

- 16,086

Net assets held for sale 450 5,875

14 tRAde And otHeR pAYABLeS

Accounting Policy

Liabilities are recognised for amounts to be paid in the future for goods and services received whether or not billed to the Group. Trade payables are usually settled within 30 days of recognition.

2018 2017 $’000 $’000

Current

Trade and other payables 44,208 39,253

Trade and other payables are non-interest bearing and are normally settled on 30 day terms.

Due to the short term nature of these payables, their carrying value is assumed to be the same as their fair value.

15 pRoViSionS

Accounting Policy

Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable a future sacrifice of economic benefits will be required and a reliable estimate of obligation can be made.

Employee Benefits

Short-term employee benefitsLiabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

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15 pRoViSionS (continued)

Employee Benefits (continued)

other long-term employee benefitsThe liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to the expected

future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Restoration, Rehabilitation and Environmental Provision

Obligations associated with exploration and development assets are recognised when the Group has a present obligation, the future sacrifice of the economic benefits is probable, and the provision can be measured reliably. The provision is measured at the present value of the future expenditure to restore the land and a corresponding rehabilitation asset is also recognised.

On an ongoing basis, the rehabilitation will be remeasured in line with the changes in the time value of money (recognised as an expense and an increase in the provision), and additional disturbances (recognised as additions to a corresponding asset and rehabilitation liability).


The determination of the provision requires significant judgement in terms of the best estimate of the future costs of performing the work required, the timing of the cash flows, the appropriate discount rate and inflation rate.

In relation to estimating the costs of performing the work required, significant judgement and estimates are required in relation to estimating the extent of rehabilitation activities, including volume to be rehabilitated and unit rates, technological changes, regulatory changes and appropriate discount rates.

When these estimates change or become known in the future, such differences will impact the mine rehabilitation provision on the period in which they change or become known.

A change in any, or a combination of, the key estimates used to determine the provision could have a material impact on the carrying value of the provision.

2018 2017 $’000 $’000

Current

Employee benefits 8,281 6,636

Non-current

Employee benefits 792 866

Provision for rehabilitation 49,406 41,622

50,198 42,488

Movement in provision for rehabilitation


Unwinding of discount 34 160

Increase in provision on existing assets 7,917 353

Rehabilitation work (167) (698)

Transferred to liabilities held for sale (note 13) - (16,086)


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16 contRiButed eQuitY And ReSeRVeS

Accounting Policy

Ordinary share capital is recognised at the fair value of the consideration received by the Group or at the fair value of equity issued as consideration for the acquisition of assets. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

2018 2017 number 2018 number 2017 of shares $’000 of shares $’000

(a) Issued capital

Ordinary shares fully paid 818,009,271 259,991 810,548,859 256,740

The Company does not have a limited authorised capital and issued shares have no par value.

(b) Movements in shares on issue

Beginning of the financial period 810,548,859 256,740 800,799,292 253,013

- Shares issued on vesting of performance rights 7,300,000 2,916 9,749,567 3,727

- Shares issued to employees 160,412 335 - -

End of the financial period 818,009,271 259,991 810,548,859 256,740

During the period 7,300,000 shares were issued to eligible employees under the employee share scheme relating to the vesting of performance rights. In addition, 160,412 shares were issued to employees under the $1,000 Tax Exempt Share Plan.

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16 contRiButed eQuitY And ReSeRVeS (continued)

(c) Performance Rights (See note 18(a))

2017 Granted Vested Lapsed 2018

Tranche 3

Class A performance rights vesting on 1 July 2017 294,000 - (294,000) - -

Class B performance rights vesting on 1 July 2017 147,000 - (147,000) - -

Class C performance rights vesting on 1 July 2017 294,000 - (294,000) - -

Tranche 4




Tranche 5

Class C performance rights vesting on 16 March 2018 5,000,000 - (5,000,000) - -

Tranche 6

Class A performance rights vesting on 1 July 2018 936,000 - - (80,000) 856,000

Class B performance rights vesting on 1 July 2018 468,000 - - (40,000) 428,000

Class C performance rights vesting on 1 July 2018 936,000 - - (80,000) 856,000

Tranche 7

Class A performance rights vesting on 1 July 2019 360,000 - - (12,000) 348,000

Class B performance rights vesting on 1 July 2019 180,000 - - (6,000) 174,000

Class C performance rights vesting on 1 July 2019 360,000 - - (12,000) 348,000

Tranche 8

Class A performance rights vesting on 1 July 2019 74,000 - - - 74,000

Class B performance rights vesting on 1 July 2019 37,000 - - - 37,000

Class C performance rights vesting on 1 July 2019 74,000 - - - 74,000

Tranche 9




Tranche 10




Tranche 11

Class A performance rights vesting on 1 July 2019 - 180,000 - - 180,000

Class B performance rights vesting on 1 July 2019 - 90,000 - - 90,000

Class C performance rights vesting on 1 July 2019 - 180,000 - - 180,000

Tranche 12




Tranche 13

Class A performance rights vesting on 1 July 2020 - 2,290,350 - (16,075) 2,274,275

Class B performance rights vesting on 1 July 2020 - 916,140 - (6,430) 909,710

Class C performance rights vesting on 1 July 2020 - 1,374,210 - (9,645) 1,364,565

11,025,000 5,690,700 (7,300,000) (262,150) 9,153,550

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(c) Performance Rights (See note 18(a)) (continued)

2016 Granted Vested Lapsed 2017

Tranche 1




Tranche 2

Class A performance rights vesting on 1 July 2016 1,103,000 - (1,103,000) - -


Class C performance rights vesting on 1 July 2016 1,103,000 - (1,103,000) - -

Tranche 3




Tranche 4

Class A performance rights vesting on 1 July 2017 850,000 - (110,933) (113,067) 626,000

Class B performance rights vesting on 1 July 2017 425,000 - (46,000) (66,000) 313,000

Class C performance rights vesting on 1 July 2017 850,000 - (118,667) (105,333) 626,000

Tranche 5

Class A performance rights vesting 2,000,000 - (2,000,000) - - on 31 December 2016

Class B performance rights vesting 3,000,000 - (3,000,000) - - on 16 March 2017

Class C performance rights vesting 5,000,000 - - - 5,000,000 on 16 March 2018

Tranche 6

Class A performance rights vesting on 1 July 2018 1,122,000 - (85,633) (100,367) 936,000

Class B performance rights vesting on 1 July 2018 561,000 - (42,167) (50,833) 468,000

Class C performance rights vesting on 1 July 2018 1,122,000 - (88,667) (97,333) 936,000

Tranche 7

Class A performance rights vesting on 1 July 2019 - 418,000 - (58,000) 360,000

Class B performance rights vesting on 1 July 2019 - 209,000 - (29,000) 180,000

Class C performance rights vesting on 1 July 2019 - 418,000 - (58,000) 360,000

Tranche 8




Tranche 9




Tranche 10




19,922,500 1,530,000 (9,749,567) (677,933) 11,025,000

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(d) Terms and conditions of contributed equity

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.

(e) Reserves

2018 2017 $’000 $’000

Share based payments reserve

Balance at beginning of year 8,913 7,736

Share based payments – performance rights 3,044 2,736

Vesting of performance rights (2,916) (3,727)

Tax effect on share based payments 5,583 2,168

Balance at end of year 14,624 8,913

The share based payments reserve is used to recognise the fair value of performance rights issued. Refer to note 18 for further details.

Investment Revaluation Reserve

Balance at beginning of year - -

Fair value movement on available for sale investments 3,727 -

Tax effect on investment revaluations (1,118) -

Balance at end of year 2,609 -

Total reserves

Share based payments reserve 14,624 8,913

Investment revaluation reserve 2,609 -


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17 coMMitMentS

(a) Gold delivery commitments

Gold for Contracted Value of physical delivery sales price committed sales oz $/oz $’000

Within one year 187,600 1,712 321,162

Later than one but not later than five years 88,000 1,769 155,636

275,600 1,730 476,798

The counterparties to the physical gold delivery contracts are Westpac Banking Corporation, BNP Paribas and Citibank N.A. Contracts are settled by the physical delivery of gold as per the contract terms. The contracts are accounted for as sale contracts with revenue recognised once gold has been delivered to the scheduled counterparties. The physical gold delivery contracts are considered a contract to sell a non-financial item and therefore do not fall within the scope of AASB 139 Financial Instruments: Recognition and Measurement. Hence, no derivatives are recognised. The contracted sales price is rounded to the nearest dollar.

(b) Operating lease commitments

2018 2017 $’000 $’000

The Group has entered into commercial leases on items of plant, machinery and property. Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:

- not later than one year 395 378

- later than one year and not later than five years 350 740

745 1,118

(c) Contractual commitments

The Group has entered into a gas supply agreement for the supply of gas to the Thunderbox gold mine. The terms of this agreement commit the Group to purchasing a minimum amount of gas at a fixed price. As at 30 June 2018, at the current contract price, the Group had commitments to purchase gas over the remaining term of $3,099,541.

The Group has entered into an electricity supply agreement for the supply of electricity to the Thunderbox gold mine. The terms of this agreement commit the Group to purchasing a minimum monthly amount of electricity at a price which is reviewed annually. As at 30 June 2018, at the current contract price, the Group had commitments to purchase electricity over the remaining term of $11,321,387.

The Group has entered into an electricity supply agreement for the supply of electricity to the Carosue Dam gold mine. The terms of this agreement commit the Group to purchasing a minimum monthly amount of electricity at a price which is reviewed annually. As at 30 June 2018, at the current contract price, the Group had commitments to purchase electricity over the remaining term of $11,698,135.

The Group has entered into an agreement for the supply of liquefied natural gas (LNG) to the Carosue Dam gold mine. The terms of this agreement commit the Group to purchasing a minimum monthly amount of LNG at a price which is reviewed annually. As at 30 June 2018, at the current contract price, the Group had commitments to purchase LPG over the remaining term of $12,833,334.

18 SHARe BASed pAYMentS

Accounting Policy

Share based compensation benefits are provided to employees via a Performance Rights Plan. The fair value of rights granted under this scheme is recognised as a share based payment expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the rights granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.

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18 SHARe BASed pAYMentS (continued)

Accounting Policy (continued)

Non-market vesting conditions are included in assumptions about the number of rights that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of rights that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

The Group measures the cost of equity settled transactions with vendors by reference to the fair value of goods or services received.


The Group measures the cost of equity settled transactions with employees by reference to the fair value of equity instruments at the date at which they are granted.

Significant judgement is required in determining the achievement of non-market conditions.

(a) Performance RightsDuring the financial year the Group granted Performance Rights to eligible management personnel under the Saracen Mineral Holdings Limited Performance Rights Plan (“Plan”) (Tranche 13). Performance Rights were also granted to the Company’s newly appointed COO, Mr Simon Jessop as part of his initial employment (Tranche 11). In addition to these, Performance Rights were granted to Mr Raleigh Finlayson (Managing Director) under the Plan (Tranche 12). These Performance Rights were approved by shareholders at the Company’s Annual General Meeting held in November 2017.

Under the Plan, Eligible Participants will be granted Performance Rights. Vesting of any of these Performance Rights will be subject to the satisfaction of performance hurdles. Each Performance Right represents a right to be issued one Share at a future point in time, subject to the satisfaction of any vesting conditions. No exercise price is payable and eligibility to receive Performance Rights under the Plan is at the Board’s discretion. The Performance Rights cannot be transferred and are not quoted on the Australian Securities Exchange (ASX). There are no voting rights attached to the Performance Rights.

For details regarding the vesting conditions of the performance rights refer to page 60 of the remuneration report.

Refer below for details regarding performance rights issued:

Tranche 1 – Managing Director

The fair value at grant date is determined using a Monte Carlo model with the following factors relevant:

class A class B class c

Stock Price at Grant $0.215 $0.215 $0.215

Exercise Price N/A N/A N/A

Volatility based on historical annual volatility of SAR securities 68.9% 68.9% 68.9%

Grant Date 19-Nov-13 19-Nov-13 19-Nov-13

Performance Period 1-Jul-13 – 30-Jun-16 1-Jul-13 – 30-Jun-16 1-Jul-13 – 30-Jun-16

Vesting Date 1 July 2016 1 July 2016 1 July 2016

Risk free rate 3.06% 3.06% 3.06%

Number of rights granted 600,000 300,000 600,000

100% of the performance rights vested during FY2017. At reporting date there were no rights on issue.

The fair value of the performance rights granted was $262,500.

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(a) Performance Rights (continued)

Tranche 2 – Management





Volatility 75.5% 75.5% 75.5%

Grant Date 23-Sep-14 23-Sep-14 23-Sep-14



Risk free rate 2.87% 2.87% 2.87%

Number of rights granted 1,148,000 574,000 1,148,000

1,103,000 Class A, 551,500 Class B and 1,103,000 Class C performance rights vested during FY2017. The remaining performance rights lapsed prior to the vesting date. At reporting date there were no rights on issue.







Volatility 76.5% 76.5% 76.5%




Risk free rate 2.81% 2.81% 2.81%


100% of the performance rights vested during FY2018. At reporting date there were no rights on issue.


Tranche 4 - Management





Volatility 80% 80% 80%

Grant Date 1-Apr-15 1-Apr-15 1-Apr-15



Risk free rate 2.65% 2.65% 2.65%


626,000 Class A, 313,000 Class B and 626,000 Class C performance rights vested during FY2018. The remaining performance rights lapsed prior to the vesting date. At reporting date there were no rights on issue.

The estimated fair value of the performance rights granted was $708,440.

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Tranche 5 - Managing Director



Stock Price at date from which services are rendered $0.535 $0.535 $0.535



Date from which services rendered 21-May-15 21-May-15 21-May-15

Performance Period 21-May-15 – 31-Dec-16 16-Mar-15 – 16-Mar-17 16-Mar-15 – 16-Mar-18

Vesting Date 31-Dec-16 16-Mar-17 16-Mar-18

Risk free rate 2.65% 2.65% 2.65%

Number of rights granted 2,000,000 3,000,000 5,000,000

2,000,000 Class A and 3,000,000 Class B performance rights vested during FY2017 and 5,000,000 Class C performance rights vested during FY2018. At reporting date there were no performance rights on issue.

The estimated fair value of the performance rights granted was $4,693,000.






Volatility 76.6% 76.6% 76.6%

Grant Date 18-Dec-15 18-Dec-15 18-Dec-15



Risk free rate 2.47% 2.47% 2.47%


At the reporting date there were 856,000 Class A, 428,000 Class B and 856,000 Class C performance rights on issue. The remaining performance rights lapsed prior to the vesting date.

The fair value of the performance rights granted was $1,242,054.






Volatility 70% N/A 70%

Grant Date 31-Aug-16 31-Aug-16 31-Aug-16



Risk free rate 1.4% N/A 1.4%


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At the reporting date there were 348,000 Class A, 174,000 Class B and 348,000 Class C performance rights on issue. The remaining performance rights lapsed prior to the vesting date.

The fair value of the Performance Rights granted was $925,870.

Tranche 8 – Managing DirectorThe fair value at grant date is determined using a Monte Carlo model with the following factors relevant:










At the reporting date there were 74,000 Class A, 37,000 Class B and 74,000 Class C performance rights on issue.

The fair value of the Performance Rights granted is $97,199.

Tranche 9 – ManagementThe fair value at grant date is determined using a Monte Carlo model with the following factors relevant:





Grant Date 18-Jan-17 18-Jan-17 18-Jan-17



Risk free rate 1.84% 2.47% 1.84%



The fair value of the performance rights granted was $72,220

Tranche 10 – ManagementThe fair value at grant date is determined using a Monte Carlo model with the following factors relevant:




Volatility based on historical annual volatility of SAR securities 65% 65% 65%

Grant Date 18-Jan-17 18-Jan-17 18-Jan-17



Risk free rate 1.84% 2.47% 1.84%



The fair value of the performance rights granted was $153,000

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Tranche 11 – Management (issued to newly appointed COO)







Performance Period 1-Jul-16 to 30-Jun-19 1-Jul-16 to 30-Jun-19 1-Jul-16 to 30-Jun-19




Fair Value per right $0.815 $1.58 $0.877








Volatility 60% N/A N/A




Risk free rate 1.8% N/A N/A





Tranche 13 – Management





Volatility 60% N/A N/A




Risk free rate 2% N/A N/A



At the reporting date there were 2,274,275 Class A, 909,710 Class B and 1,364,565 Class C performance rights on issue.

The fair value of the Performance Rights granted is $6,099,605.

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(b) Tax exempt shares

During FY2018 160,412 shares were issued to employees under the $1,000 Tax Exempt Share Plan.

The fair value of the shares issued was $335,261.

(c) Reconciliation of Share based payments expense

2018 2017 $’000 $’000

Performance rights 3,044 2,736

Tax Exempt shares 335 -


19 inteReStS in SuBSidiARieS

percentage of equity interest held by the parent

2018 2017 % %

Parent Entity:

Saracen Mineral Holdings Limited (i) (ii)

Subsidiaries:

Saracen Gold Mines Pty Limited (ii) (iii) 100 100

Saracen Metals Pty Limited (ii) (iii) 100 100

All entities are incorporated in Australia and shareholdings relate to ordinary shares.

(i) Saracen Mineral Holdings Limited is the head entity within the tax-consolidated Group and the parent entity.(ii) These companies are members of the tax-consolidated Group.(iii) The subsidiaries have entered into a deed of cross guarantee with Saracen Mineral Holdings Limited pursuant

to ASIC Instrument 2016/191, dated 1 April 2016 and are relieved from the requirement to prepare and lodge an audited financial report.

In the current and prior year the consolidated statements of profit or loss and other comprehensive income and financial position of the entities party to the Deed of Cross Guarantee are the same as the Group and have therefore not been reproduced.

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20 StAteMent oF cASH FLoWS

Accounting Policy

Cash on hand and in bank and short-term deposits are stated at nominal value. For the purpose of the statement of cash flows, cash includes cash on hand and in bank, and bank securities readily converted to cash, net of outstanding bank overdrafts.

2018 2017 $’000 $’000

(a) Reconciliation of cash

Cash balance comprises:

- Cash 88,687 15,511

- Cash at call and in short term deposits 11,087 18,215

Closing cash balance 99,774 33,726

(b) Reconciliation of the operating profit after income tax to the net cash flows from operating activities

Operating profit after income tax 75,585 28,386

Non-cash items

Depreciation and amortisation 94,346 74,679

(Profit)/loss on the sale of assets (10,594) 39

Effective interest on establishment fees - 238

Expensing of deferred exploration cost 1,405 2,477

Impairment of assets 896 2,776

Tax effect of movement in deferred tax balances 37,689 4,592

Share based payments 3,379 2,736

Unwinding of discount - rehab provision 34 160

Changes in assets and liabilities

(Increase)/decrease in trade and other receivables (289) (169)

(Increase)/decrease in prepayments (118) 506

(Increase)/decrease in inventory (19,399) (3,335)

Increase in trade and other payables 7,410 9,348

Decrease in provisions 1,081 3,199

Net cash flows provided by operating activities 191,425 125,632

(c) Cash balances not available for use

The Group has deposits of $55,000 (2017: $55,000) held as security by a bank for guarantees and credit card facilities.

This amount is not available for use and has therefore not been included in cash and cash equivalents.

(d) Non cash financing and investing activities

During the year the Group acquired Available for Sale assets with a fair value of $7.7m as consideration for the sale of the King of the Hills, Red October and Wallbrook operations per notes 11 and 13. These acquisitions are not reflected in the statement of cash flows.

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21 ReLAted pARtY diScLoSuReS

2018 2017 $’000 $’000

(a) ultimate parent

Saracen Mineral Holdings Limited is the ultimate parent company.

Information relating to Saracen Mineral Holdings Limited:

Current assets 111,506 30,065

Total assets 245,019 248,913

Current liabilities 4,026 2,970

Total liabilities 43,274 9,007

Contributed equity 259,992 256,740

Share based payment reserve 14,625 8,319

Investment revaluation reserve 2,609 -

Accumulated loss (75,480) (25,748)

Total equity 201,744 239,905

Net loss of the parent (49,732) (15,877)

Saracen Mineral Holdings Limited is party to a deed of cross guarantee with its wholly owned subsidiary Saracen Gold Mines Pty Limited and Saracen Metals Pty Limited as described in note 19(iii) pursuant to ASIC Instrument 2016/191, dated 1 April 2016.

At 30 June 2018, Saracen Mineral Holdings Limited had no contingent liabilities and had not entered into contractual commitments to purchase property, plant or equipment (2017: Nil).

(b) Subsidiaries

Details of interests in subsidiaries are set out in note 19.

Loans between group entities have no specific repayment terms and are unsecured.

The aggregate amounts receivable/ (payable) by the Company from/to subsidiaries at the reporting date were:

2018 2017 $’000 $’000

Non-current receivable 133,158 218,256

Reconciliation of non-current receivable

Balance at beginning of year 218,256 239,265

Loans provided to/(repaid by) subsidiaries (85,098) (21,009)


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21 ReLAted pARtY diScLoSuReS (continued)

(c) Key management personnel

Disclosures relating to key management personnel are set out in the remuneration report in the Directors’ Report.

2018 2017 $ $

Short term benefits 3,483,524 2,675,851

Post-employment benefits 178,265 178,949

Other benefits 22,386 16,243

Termination benefits - 433,034

Long term benefits 23,995 29,296

Share based payments 1,654,173 2,114,335

5,362,343 5,447,708

Detailed remuneration disclosures are provided in the remuneration report on pages 53 to 74.

Transactions with related parties

The following transactions occurred with related parties:

Payment for goods and services:

2018 2017 $’000 $’000

Professional Services from PilotHole Pty Ltd (director related entity of Martin Reed) - 8,768

Director’s fees PilotHole Pty Ltd (director related entity of Martin Reed) 120,000 107,500

Payable to related parties

There were no payables to related parties at the current and previous reporting date.

Loans to/from related parties

There were no loans to or from related parties at the current and previous reporting date.

Terms and conditions

Transactions with Directors and key management personnel have been entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.

22 SeGMent inFoRMAtion

The Group require operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker (“CODM”) in order to allocate resources to the segments and to assess their performance. On this basis the Group’s reportable segments under AASB 8 are as follows:

- Saracen Gold Mines Pty Limited (“SGM”) which includes the Group’s exploration, production and administration relating to the Carosue Dam operations.

- Saracen Metals Pty Limited (“SME”) which includes the Group’s exploration, development, production and administration relating to the Thunderbox operations.

- Saracen Mineral Holdings Limited (“SAR”) which includes the Group’s corporate administration.

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 1.

The CODM reviews segment profit before tax in assessing segment performance which corresponds to operating profit before other income / expenses in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Information regarding the Group’s reportable segments is presented below.

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22 SeGMent inFoRMAtion (continued)

2018 2017 $’000 $’000

(a) Segment external revenues

SGM - Metal sales 276,168 251,826

SME - Metal sales 234,793 171,232

SGM - Other 52 11

SME - Other 72 178

SGM - Interest income 6 42

SME - Interest income 7 6

SAR - Interest income 1,076 285

512,174 423,580

(b) Segment profit before tax

SGM 51,680 14,358

SME 74,417 32,950

SAR (9,350) (8,576)

Operating profit before other income / (expenses) 116,747 38,732

Finance costs (411) (764)

Other income 1,213 522

Share based payments expense (3,379) (2,736)

Impairment of assets (896) (2,776)

Profit before income tax 113,274 32,978

(c) Segment assets and liabilities

Assets

SGM 189,662 173,417

SAR 111,861 30,656

SME 221,701 200,384

523,224 404,457

Liabilities

SGM 58,451 51,389

SAR 4,063 3,020

SME 40,335 50,054

Unallocated – Deferred Tax Liability 39,211 5,986

142,060 110,449

For the purposes of monitoring segment performance and allocating resources between segments, all assets and liabilities are allocated to reportable segments other than tax assets and liabilities.

(d) Other segment information

Depreciation and amortisation of $35.627 million (2017: $39.167 million) and $58.483 million (2017: $35.512 million) are attributable to the SGM and SME segments respectively.

An impairment of $0.9 million relating to the sale of the Wallbrook tenements is attributable to the SGM segment.

Total non-current asset additions of $58.246 million (2017: $55.791 million) and $73.129 million (2017: $63.540 million) are attributable to the SGM and SME segments respectively.

The Group operates within one geographical segment, being Australia.

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23 FinAnciAL RiSK MAnAGeMent

The Group’s principal financial instruments comprise cash and short-term deposits. In addition the Group has financial assets at fair value through profit or loss, trade receivables and trade payables arising directly out of its operations. Risk oversight, management and internal control are dealt with on a continuous basis by management and the Board, with differing degrees of involvement depending upon the nature and materiality of the matter being dealt with.

The Board as a whole guides and monitors the business and affairs of Saracen. The Board has also constituted Risk Management and Audit Committees which oversee various aspects of the financial risks of the Group.

(a) Market risk

Interest rate risk

The Group’s exposure to interest rate risk relates primarily to the assets and liabilities bearing variable interest rates. The Group does not engage in any hedging or derivative transactions to manage interest rate risk. The following tables sets out the carrying amount, by maturity of the Group’s exposure to interest rate risk and the effective weighted average interest rate for each financial instrument.

30 June 2018 Weighted Variable non- con- average interest Fixed interest Rate interest solidated rate Rate bearing total under 1 1 – 2 2 – 5 5+ year years years years % $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial AssetsCash assets 1.48 99,774 - - - - - 99,774Other receivables N/A - - - - - 9,340 9,340Security deposits N/A - - - - - 55 55Total Financial Assets 99,774 - - - - 9,395 109,169

30 June 2017 Weighted Variable Non- Con- average interest Fixed Interest Rate interest solidated rate Rate bearing Total Under 1 1 – 2 2 – 5 5+ year years years years % $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial AssetsCash assets 0.97 33,726 - - - - - 33,726Other receivables N/A - - - - - 6,353 6,353Security deposits N/A - - - - - 55 55Total Financial Assets 33,726 - - - - 6,408 40,134

Commodity risk

The Group’s exposure to commodity risk arises from movements in the gold price. The Group is party to gold delivery contracts (note 17) whereby specified quantities of gold are sold on specific dates to partially manage the commodity risk.

Currency risk

The Group is exposed to the Australian dollar currency risk on gold sales, which are denominated in US dollars. The Group is party to gold delivery contracts (note 17) for specified quantities of gold on specific dates to partially manage the currency risk.

(b) Credit risk

The Group trades only with recognised, creditworthy third parties. There are no significant concentrations of credit risk within the Group. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with a minimum credit rating of AA assigned by reputable credit rating agencies.

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23 FinAnciAL RiSK MAnAGeMent (continued)

(c) Liquidity risk

The Group manages liquidity risk by maintaining sufficient cash reserves and marketable securities, and through the continuous monitoring of budgeted and actual cash flows. At the reporting date there is no significant liquidity risk. The table below analyses the Group’s maturity of financial liabilities:

30 June 2018 ‹ 6 month 6 – 12 months 1 – 5 years 5+ years total $’000 $’000 $’000 $’000 $’000

Trade payables 44,208 - - - 44,208

Borrowings 163 - - - 163

Total Financial Liabilities 44,371 - - - 44,371

30 June 2017 ‹ 6 month 6 – 12 months 1 – 5 years 5+ years total $’000 $’000 $’000 $’000 $’000

Trade payables 39,253 - - - 39,253

Total Financial Liabilities 39,253 - - - 39,253

(d) Sensitivity analysis

The following table summarises the Group’s exposure to interest rate risk at the reporting date. The sensitivities are based on management’s best estimate of the market views for future interest rates over the next 12 months with reference to recent historical movements. The analysis demonstrates the after tax effect on the profit/(loss) and equity which could result from changes based on the following:

30 June 2018 profit/(loss) equity $’000 $’000

Interest rate risk

- Increase interest rate by 1% 698 698

- Decrease interest rate by 1% (698) (698)

30 June 2017 Profit/(loss) Equity $’000 $’000

Interest rate risk

- Increase interest rate by 1% 236 236

- Decrease interest rate by 1% (236) (236)

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(e) Net fair values

The net fair values of financial assets and financial liabilities at the reporting date are as follows:

total carrying amount as per Aggregate net the Statement of Financial fair value position consolidated consolidated

2018 2017 2018 2017 $’000 $’000 $’000 $’000

Financial Assets

Cash and cash equivalents 99,774 33,726 99,774 33,726

Other receivables 9,340 6,353 9,340 6,353

Investments – listed 11,682 7 11,682 7

Other financial assets 55 55 55 55

Assets held for sale 450 4,900 450 4,900

Total Financial Assets 121,301 45,041 121,301 45,041

Financial Liabilities

Trade payables 44,208 39,253 44,208 39,253

Borrowings 163 - 163 -

Liabilities held for sale - 2,900 - 2,900

Total Financial Liabilities 44,371 42,153 44,371 42,153

Fair value hierarchy

AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

• quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),

• inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2), and

• inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at 30 June 2018 and 30 June 2017 on a recurring basis:

$’000 $’000 $’000 $’000 30 June 2018 Level 1 Level 2 Level 3 total

Assets

Listed shares at fair value 11,682 - - 11,682

Assets held for sale (Red October operation) - 450 - 450

11,682 450 - 12,132

Liabilities

Liabilities held for sale - - - -

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(e) Net fair values (continued)

$’000 $’000 $’000 $’000 30 June 2017 Level 1 Level 2 Level 3 total

Assets

Listed shares at fair value 7 - - 7

Assets held for sale (Red October operation) - 4,900 - 4,900

7 4,900 - 4,907

Liabilities

Liabilities held for sale (Red October operation) - 2,900 - 2,900

The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 June 2018 and did not transfer any fair value amounts between the fair value hierarchy during the period FY2018.

Valuation techniques used to derive level 2 and level 3 fair values

The fair value of financial instruments that are not traded in an active market (for example, over–the–counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include:

• The use of quoted market prices or dealer quotes for similar instruments.

• Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

In accordance with AASB 13, Fair Value Measurement the Group has classified the Red October operation as a level 2 asset. The fair value of Red October was determined by using the expected selling price at the reporting date (refer to note 13).

The Group does not have any level 3 assets or liabilities.

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24 cApitAL MAnAGeMent

Management’s objective is to ensure the Group continues as a going concern and in the interests of shareholders. It aims to maintain a capital structure with the lowest cost of capital available to the Group. The Group has detailed planning processes, budgets and cash flow forecasts through which it continually monitors its position against the above objectives. At 30 June 2018, the capital structure consisted of total shareholders’ funds, cash and other financial assets less finance lease borrowings. The Group’s overall strategy remains unchanged from 2017.

The Company maintains a long term senior corporate financing facility. The facility includes an initial $45 million loan facility, $5 million bank guarantee facility and a gold hedging facility. The facility was for a term of three years and features an “evergreen” arrangement with an annual review date whereby the term can be extended.

The Facility also features an accordion provision whereby Saracen can request up to an additional $105 million capacity under the corporate loan (to take the loan to $150 million) with the approval of the syndicate members.

As at 30 June 2018, the facility had not been drawn down on.

25 continGent LiABiLitieS

There are no contingent liabilities at 30 June 2018 (2017: Nil).

26 MAtteRS SuBSeQuent to tHe RepoRtinG dAte

On 21 August 2018, Saracen entered into a contract with GR Engineering Services Limited for the engineering design, procurement and construction of a paste backfill plant at the Carosue Dam operations for an estimated contract value of $17.9m.

No other material events have occurred since 30 June 2018 requiring disclosure.

Except for the event detailed above, no other matter or circumstance has arisen since 30 June 2018 that has significant affected, or may significantly affect:

• the Group’s operation in future financial years, or

• the result of those operations in future financial years, or

• the Group’s state of affairs in future financial years.

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DIRECTORS’ decLARAtion

The Directors of Saracen Mineral Holdings Limited declare that, in their opinion:

(a) the financial statements and notes and the Remuneration Report in the Directors’ Report set out on pages 53 to 74, are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance, for the financial year ended on that date, and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001 and other mandatory professional reporting requirements.

(b) the financial report also complies with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) as disclosed in note 1(b), and

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

At the date of this declaration there are reasonable grounds to believe that the Company and the group entities identified in note 19 will be able to meet any obligations or liabilities to which they are or may have become subject to by virtue of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Instrument 2016/191.

The directors have been given the declarations required by Section 295A of the Corporations Act 2001 by the chief executive officer and chief financial officer for the financial year ended 30 June 2018.

Signed in accordance with a resolution of the directors.

RALEIGH FINLAYSON

Managing Director 21 August 2018

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INDEPENDENT AuDITOR’S REPORT



INDEPENDENT AUDITOR'S REPORT

To the members of Saracen Mineral Holdings Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Saracen Mineral Holdings (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration.

In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including:

(i) Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance for the year ended on that date; and

(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.



BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees

INDEPENDENT AUDITOR'S REPORT

To the members of Saracen Mineral Holdings Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Saracen Mineral Holdings Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration.

In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including:

(i) Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for the year ended on that date; and

(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Provision for rehabilitation

Key audit matter How the matter was addressed in our audit

The Group’s provision for rehabilitation, as disclosed in Note 15 was a key audit matter as it requires significant estimates of future costs.

The rehabilitation provision is required to be reassessed each reporting period to reflect the best estimate of future costs necessary to restore the land and the estimated timing of when those costs will be incurred, discounted to a present value.

The determination of the provision requires management’s judgement in relation to estimating the costs of performing the work required, including volume and unit rates, the timing of cash flows, the appropriate discount rate and environmental legislative requirements.

Our audit procedures included, but were not limited to:

• agreeing provision balances to supporting reconciliations and cost models;

• checking the mathematical accuracy of the provision for rehabilitation calculations;

• verifying significant amendments in the cost models to supporting documentation and correspondence;

• assessing the competency and objectivity of both the Group’s internal and external experts involved in the cost models preparation and review;

• evaluating the adequacy of the experts work;

• assessing the expected timing of the rehabilitation to the respective Life of Mine (“LoM”) models and evaluating the reasonableness of the discount rate applied to the expected cash flows;

• performing a sensitivity analysis assessment on the key estimates and assumptions in the cost models; and

• assessing the adequacy of the related disclosures in Note 15 to the financial statements.

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independent AuditoR’S RepoRt (continued)

Accounting for mine properties


The Group’s carrying value of mine properties, as disclosed in Note 12 was a key audit matter as the carrying value of mine properties is impacted by various key estimates and judgements, in particular the following:

• Reserves and estimates;

• Commercial production start date;

• Amortisation rates; and

• LoM average stripping ratio.

Furthermore, as the carrying value of mine properties represents a significant asset of the Group, we considered it necessary to assess whether any facts or circumstances exist to suggest that the carrying amount of this asset may exceed its recoverable amount.


• evaluating the Group’s amortisation policy in accordance with the Australian Accounting Standards and relevant accounting interpretations and reviewing its consistency in application across the Group’s operating mines;

• agreeing the inputs including the ore reserve estimates and ounces of gold produced during the year that were used in the calculation of the amortisation rates to supporting documentation;

• testing the mathematical accuracy and application of the amortisation rates applied to the carrying values of all mine properties in commercial production by recalculating amortisation for the year;

• reviewing Board minutes and ASX announcements to confirm mines have entered commercial production;

• assessing the competency and objectivity of the expert used by management in the preparation of the ore reserve report;

• assessing management’s calculation of the stripping asset based on actual stripping ratios from technical reports and compared this data to the average stripping ratio included within the LoM;

• evaluating whether there were any indicators of impairment under the Australian Accounting Standards; and


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Valuation of ore stocks


The Group’s inventory, as disclosed in Note 7 was a key audit matter as the inventory costing models require significant estimates to calculate the cost of the ore stocks and net realisable value (“NRV”).

The determination of the NRV of the ore stocks requires management’s judgement in relation to estimating the future gold prices, future processing costs and related selling costs, ore grades, volumes and densities.


• assessing the model applied by the Group in determining the NRV for ore stocks against the requirements of the Australian Accounting Standards;

• obtaining management’s technical reports, including surveying reports and agreeing the ore grades and tonnages included in the inventory costing models as at 30 June 2018;

• evaluating the processes undertaken by the expert in preparing the technical reports;

• assessing the competency and objectivity of the expert used by management in the preparation of the technical reports;

• observing the surveying process and procedures as part of our year end site visit;

• comparing future gold prices used in management’s models to current gold price data, market consensus and trends and assessing future expected processing and selling costs used in management’s models to actual costs incurred during the year; and


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Other information

The directors are responsible for the other information. The other information comprises the information contained in the Financial Report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the Annual Report to Shareholders, which is expected to be made available to us after that date.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the Annual Report to Shareholders, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared.

Responsibilities of the directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:

http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf

This description forms part of our auditor’s report.

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Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 53 to 74 of the directors’ report for the year ended 30 June 2018.

In our opinion, the Remuneration Report of Saracen Mineral Holdings Limited, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

BDO Audit (WA) Pty Ltd

Phillip Murdoch

Partner

Perth, 21 August 2018

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SHAREHOLDER INFORMATION

The following additional information was applicable as at 28 August 2018.

1. SuBStAntiAL SHAReHoLdeRS

The names of the substantial shareholders and the number of shares in which they have a relevant interest are:

Substantial Shareholder Fully paid Ordinary Shares %

Van Eck Associates Corporation 107,878,540 13.2

Wroxby Pty Ltd 48,422,703 6.0

Paradice Investment Management Pty Ltd 41,285,327 5.1

2. FuLLY pAid oRdinARY SHAReS

(a) There are 6,652 holders of fully paid ordinary shares. Holders of fully paid ordinary shares are entitled to one vote per fully paid ordinary share.

(b) Distribution of fully paid ordinary shareholders:

category number of Fully paid (Size of Holding) ordinary Shareholders

1-1,000 1,310

1,001-5,000 2,293

5,001-10,000 1,173

10,001-100,000 1,709

100,001 and over 167

Total 6,652

(c) The number of fully paid ordinary shareholdings held in less than marketable parcels is 359 (based on a share price of $1.95).

(d) The 20 largest fully paid ordinary shareholders together held 87.10% of the securities in this class.

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20 LARGEST FULLY PAID ORDINARY SHAREHOLDERS Name Number %

1 HSBC Custody Nominees (Australia) Limited 329,860,127 40.21

2 J P Morgan Nominees Australia Limited 147,309,044 17.96

3 Citicorp Nominees Pty Limited 78,370,096 9.55

4 Wroxby Pty Ltd 48,422,703 5.90

5 National Nominees Limited 28,210,720 3.44

6 BNP Paribas Nominees Pty Ltd <Agency Lending Drp A/C> 17,922,373 2.18

7 UBS Nominees Pty Ltd 11,721,639 1.43

8 HSBC Custody Nominees (Australia) Limited <Nt-Comnwlth Super Corp A/C> 10,943,959 1.33

9 BNP Paribas Noms Pty Ltd <Drp> 8,618,076 1.05

10 FF Okram Pty Ltd <Ff Okram A/C> 4,700,000 0.57

11 National Nominees Limited <Db A/C> 4,263,606 0.52

12 Mrs Vanessa Marnie Finlayson <Finlayson Family A/C> 4,016,819 0.49

13 Mr Richard Arthur Lockwood 3,500,000 0.43

14 Citicorp Nominees Pty Limited <Colonial First State Inv A/C> 3,299,755 0.40

15 CS Third Nominees Pty Limited <HSBC Cust Nom Au Ltd 13 A/C> 2,925,358 0.36

16 AMP Life Limited 2,457,000 0.30

17 Quality Life Pty Ltd <The Neill Family A/C> 2,450,000 0.30

18 Quality Life Pty Ltd <The Neill Family A/C> 2,200,000 0.27

19 BNP Paribas Nominees Pty Ltd <Agency Lending Collateral> 1,769,914 0.22

20 Asia Union Investments Pty Ltd 1,500,000 0.18

Total 714,461,189 87.10

There is a total of 820,249,271 fully paid ordinary shares on issue, all of which are listed on the Australian Securities Exchange.

3. UNLISTED EMPLOYEE PERFORMANCE RIGHTS

As at 28 August 2018, there are a total of 6,913,550 unlisted Performance Rights on issue held by 68 different persons. These Rights have no exercise price and vest between 1 July 2019 and 1 July 2020 subject to the fulfilment of the relevant vesting conditions and that the holder is still an employee of the Saracen Group at that time.

4. COMPANY SECRETARY

Mr Jeremy Ryan

5. REGISTERED AND PRINCIPAL OFFICE

The address of the registered and principal office is:-

Level 11 40 The Esplanade Perth, WA 6000

Telephone: (08) 6229 9100 Facsimile: (08) 6229 9199

6. REGISTER OF SECURITIES

Held at the following address:-

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace Perth, WA 6000

Telephone: 1300 850 505 Facsimile: (03) 9473 2500

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CORPORATE DIRECTORY

Board of Directors

Mr Geoffrey Clifford (Non-Executive Chairman)

Mr Raleigh Finlayson (Managing Director)

Mr Martin Reed (Non-Executive Director)

Ms Samantha Tough (Non-Executive Director)

Dr Roric Smith (Non-Executive Director)

Company Secretary

Mr Jeremy Ryan

Registered Office and Business Address

Level 11, 40 The Esplanade Perth WA 6000


Website: saracen.com.au

Stock Exchange Listing

Listed on the Australian Securities Exchange

(ASX Code: SAR)

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street, Subiaco WA 6008


Solicitors

DLA Piper, Level 31, Central Park 152 – 158 St Georges Terrace, Perth WA 6000

Telephone: +61 8 6467 6000

Bankers

Australia and New Zealand Banking Group 833 Collins Street, Melbourne VIC 3008

Telephone: +61 3 9273 5555

Share Registry

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace, Perth WA 6000

Telephone: 1300 850 505 Facsimile: +61 3 9473 2500

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SARACEN.COM.AUABN: 52 009 215 347

ABN: 52 009 215 347

ANNUAL REPORT

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ABN: 52 009 215 347 · of gold produced from the Thunderbox Operations and in June 2018, with the...

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Transcript of ABN: 52 009 215 347 · of gold produced from the Thunderbox Operations and in June 2018, with the...